Skip to main content

In China, a country where societal trust is low and companies struggle to know who is reliable, Ant Financial has, for several years, offered an answer. For those willing to sign up, Ant Financial, a company spun out of digital giant Alibaba, will scour online purchase records, lending histories and even friend networks to produce a credit score that can be used as a badge of trustworthiness among peers and vendors alike.

Now, the company’s Sesame Credit has won the confidence of the government of Canada as well. Ottawa has begun allowing Chinese visa applicants to submit the company’s reports as “proof of financial standing.” Traditionally, only bank documents could be used, but a recent change by Immigration, Refugees and Citizenship Canada (IRCC) allows Sesame documentation instead, although bank documents can still be used.

A specially generated report, created by Ant Financial and, for now, used only for Canada, “contains information needed by IRCC to process a client’s application, such as spending history, assets and bill payment history,” Béatrice Fénelon, a spokeswoman with the department, said in a statement, citing added convenience for applicants.

Canada is the first major Western country to accept a Sesame report as formal documentation, a step that comes amid a broader effort by the Chinese financial sector to increase its presence in Canada.

The Sesame score is meant as a measure of financial reliability. It is separate from the social-credit system Chinese authorities are building – a far-reaching structure to track a person’s broader conduct and blacklist those considered problematic – although Ant has said it will, when required by law, share information on customer trustworthiness that can be used in social-credit evaluations.

Exactly how Ant scores users is a secret, however, and because Sesame Credit is closely tied to Alibaba, critics say it rewards shoppers’ loyalty to a single company. Even China’s central bank has accused it of falling short of expectations.

Last year, Wan Cunzhi, head of credit regulation at the People’s Bank of China, criticized Ant and other Chinese companies for failing to meet “the standards” for a trustworthy personal credit system.

Still, the Canadian decision on Ant is a major international vote of confidence in a Chinese company’s evaluation of its users’ economic health.

“It is saying we consider these to be legitimate financial statements," said Shazeda Ahmed, a PhD student at the University of California, Berkeley, who studies co-operation between the Chinese government and technology companies in developing credit systems.

Ant Financial “has encountered some difficulties in China with the authorities. Now they’re making these really bold moves to be established as legitimate enough that a government would use their data, potentially making visa-issuing decisions,” she said.

In Canada, a renewed effort is under way to establish closer economic ties with China.

Several Chinese banks are in the midst of regulatory applications to expand operations in Canada. The Toronto Stock Exchange and Shenzhen Stock Exchange are working to ease the movement of money between the two countries.

Ant Financial, meanwhile, is working to expand its Alipay mobile payment service in Canada, saying it can help Chinese tourists use a familiar tool to buy goods. The company also wants to expand into cross-border money transfers, supply-chain financing and investment products in Canada, Ant Financial chief strategy officer Chen Long told The Globe and Mail last year in Hangzhou, at the Alibaba headquarters, where chief executive Jack Ma met with Prime Minister Justin Trudeau.

The use of Sesame Credit reports in visa applications is separate from Ant’s broader aims in Canada, a company representative said.

Sesame Credit issues users a score from 350 to 950. Canada won’t rely on the specific number and “no priority is given to applicants with high credit scores,” Ms. Fénelon said, although only users with high scores – more than 750 – can apply.

In the application process, a user enters personal details, including passport and cellphone numbers, then allows their picture to be taken for a facial-recognition scan. Moments later, Ant Financial e-mails a report that can be submitted to visa authorities. It includes details of a person’s spending and assets with Ant Financial. From start to finish, it takes five minutes.

Although Sesame doesn’t survey a person’s entire financial holdings, it has effectively become China’s credit rater, “because there’s no other standard,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics, a Washington-based non-profit.

In a country “where many people don’t have traditional credit histories, it is a useful tool,” he said. “It tells you more than just a number in their account. It tells you more about their behaviour.”

That attribute has also raised concern over whether it “is a valid indicator of a person’s financial credit-worthiness, when it measures their behaviour broadly, including who their friends are, or which charities they donate to,” said Maya Wang, senior China researcher for Human Rights Watch. “There are also questions as to whether the scheme is also, in part, an attempt to foster social conformity.”

The potential links between Sesame and China’s looming social-credit system have prompted further worry.

Ms. Fénelon of Immigration, Refugees and Citizenship Canada dismissed those concerns.

The Sesame report is an “evaluation and description of a user’s current credit condition and future default possibilities,” she said. “It is not related to the Chinese government’s social-credit plan.”

With reporting by Alexandra Li

Report an error

Editorial code of conduct