Chinese
e-commerce giant Alibaba Group is scheduled to launch its virtual credit card
service next week as part of its policy to promote online shopping, according
to a source familiar with the matter.
The source
said Alibaba's online payment service Alipay is looking to partner with banks
to launch online credit lines of up to 5,000 yuan (US$800) for each customer,
with an interest-free period of up to 38 days.
Online
shoppers would not receive a physical credit card but an Alipay account, the
source said.
On average,
banks offer interest-free credit of 1,000 yuan (US$160) to 50,000 yuan
(US$8,000) for a period of between 20 to 56 days.
The service
will be available on mobile devices such as smartphones and tablets, and will
be confined to Alibaba's Taobao and Tmall.com sites.
Alipay and
the group's financial arm Alibaba Small and Micro Financial Services Group
could not be immediately contacted to confirm the report, the Chinese-language
Chongqing Evening News stated.
A
guaranteed subsidiary set up by Alibaba in Chongqing will act as a guarantor
for buyers. A commission of between 0.8%-1% will be charged by the vendor when
an order is placed. An overdue payment will result in a 50% interest rate
penalty charge.
The group
will first send a text message to customers whose payments are overdue,
followed by a voice message, with the final recourse being a personal visit
from a debt collector.
If all
these methods still result in no payments for more than a year, the group will
cancel the customer's account.
Asked
whether the penalty was too light, the source said a detailed plan to deal with
such scenarios was still being mapped out and had not been finalized.
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