From consumer finance licenses to stablecoins, JD.com is once again making strides in finance

In May, JD.com welcomed two pieces of good news.

In the domestic market, Home Credit Consumer Finance (hereinafter referred to as "Home Credit") officially changed its name to "Tianjin JD Consumer Finance" (hereinafter referred to as "JD Consumer Finance"), with JD.com's Guangzhou Jingdong Trading and JD Technology's Online Banking holding 50% and 15% of the shares, respectively.

JD.com's business license in internet credit may expand from micro-lending to consumer finance;

The two financing licenses with a 20-fold difference in leverage indicate that the scale of credit that JD.com can leverage in the future will be incomparable.

Based on the current net assets of micro-lending companies at 8 billion yuan and the net capital of consumer finance companies at 5 billion yuan, the difference in the credit scale that can be leveraged by the two licenses through the theoretical maximum leverage may exceed 280 billion yuan.

Almost simultaneously, the Hong Kong "Stablecoin Regulation Draft" was passed by the Legislative Council, forming the basis for a licensing system for future fiat stablecoin issuers.

One of the beneficiaries is JD Coin Chain Technology (Hong Kong), which entered the first batch of stablecoin issuer sandbox list last year.

As a crypto token anchored to fiat currency, stablecoins are less volatile compared to traditional crypto assets like Bitcoin and Ethereum, and have unlimited potential in areas such as cross-border payments and supply chains in Web3.

Now, JD.com is the first major internet company in China to directly participate in stablecoin issuance. Although stablecoins have not been officially issued, they have already entered the second phase of sandbox testing;

JD Coin Chain Technology has obtained the Type 1 (Securities Trading), Type 4 (Providing Advice on Securities), and Type 9 (Asset Management) licenses from the Hong Kong Securities and Futures Commission.

The two pieces of news released consecutively signal JD.com's aggressive push into instant retail while still harboring ambitions for a larger financial landscape;

With the development of consumer finance companies and stablecoin issuance, JD.com's financial ecosystem both domestically and internationally may undergo more changes.

Leverage Elevator

The landing of the consumer finance license is of great significance to JD.com's credit business.

In the business adjustment of 2022, JD.com integrated its four micro-lending companies into Chongqing JD Shengji Micro-lending (hereinafter referred to as "JD Micro-lending").

Subsequently, various credit businesses such as Bai Tiao, Jin Tiao, and business owner loans were developed based on this entity.

Compared to micro-lending companies, the liability side of consumer finance includes shareholder deposits, bond issuance, and ABS among other channels.

However, the difference is that it has added interbank borrowing, which means JD.com has obtained a ticket to enter the interbank market through the consumer finance license and is expected to acquire lower-cost, flexible interbank funds.

In fact, under the declining interest rates, the ABS cost of JD Micro-lending is not high.

In October 2024, the 2-year priority ABS "Shenghong 11 Preferred" issued by JD Micro-lending had a coupon rate of 2.49%; on the same day, the 1-year interest rate in the interbank borrowing market was 2.1%, with a difference of only 39 basis points.

The core point remains that the leverage level of consumer finance companies is far higher than that of micro-lending companies.

Under the current rules, micro-lending companies still follow the "1+4" (1 time for non-standard financing such as shareholder loans, 4 times for standard financing such as ABS) restriction, with a maximum leverage of 5 times;

Consumer finance companies have a leverage ratio of not less than 4% after including off-balance-sheet financing such as ABS, and the capital adequacy ratio must not be less than 8% based on specific risk weights, with a theoretical maximum leverage of 25 times Ant Group, as a major player, illustrates the potential leverage that consumer finance companies can exert after increasing leverage.

From the perspective of on-balance-sheet assets, Ant Group's consumer finance total assets of CNY 313.751 billion at the end of 2024 are nearly 14 times its registered capital of CNY 23 billion.

During the same period, there were 13 institutions among consumer finance companies with a total assets to registered capital ratio exceeding 15 times;

If off-balance-sheet assets such as ABS are included, the overall leverage level may be even higher.

According to relevant media data, JD.com’s micro-loan net assets are approximately CNY 8 billion, with total assets of CNY 16.245 billion being only twice the former;

In addition to off-balance-sheet CNY 40 billion in outstanding ABS, the leverage bullet has been fully loaded at 5 times.

Currently, JD.com’s consumer finance and micro-loan net capital and net assets are approximately CNY 5 billion and CNY 8 billion, respectively, estimating a financing gap of CNY 85 billion between the two.

In the existing model, consumer finance and micro-loan companies can also cooperate with banks to lend, with the funding ratio not less than 30%.

This means that when lending, the two can also obtain bank funding at a maximum ratio of 3:7.

Under the influence of joint lending, the credit scale difference provided by consumer finance and micro-loan companies to consumers can reach up to CNY 280 billion;

If self-owned funds are leveled to CNY 8 billion, the credit scale difference leveraged by the two exceeds CNY 500 billion.

Off-Balance-Sheet History

Since its establishment, leverage has been an unavoidable topic for JD.com’s financial services.

In early 2014, JD.com launched the industry's first credit consumption product, Bai Tiao, setting a precedent for the internet's buy now, pay later model.

The logic of Bai Tiao is to provide revolving credit sales to individuals, which can enhance user stickiness and increase mall sales.

However, it is difficult to make bricks without straw; the key pain point lies in where to source the borrowing funds.

JD.com’s early approach was to extend credit using its own funds and then issue ABS based on accounts receivable to enhance asset liquidity.

From 2015 to 2020, JD.com’s operating entity frequently utilized Bai Tiao accounts receivable to issue ABS;

During this period, ABS applications totaled CNY 113 billion, with CNY 83.757 billion issued.

Issuing ABS with the mall rather than micro-loans as the original equity holder allowed JD.com to temporarily avoid regulatory scrutiny over micro-loan companies using ABS to infinitely amplify leverage.

In the same year, JD Technology, which was sprinting for the Sci-Tech Innovation Board, stated that the company’s involvement in Bai Tiao business mainly remained at the technical assistance level:

First, using risk models to help the mall design credit limits, and second, assisting the mall in selecting Bai Tiao debt to issue ABS, with its micro-loan only involving small-scale credit and not engaging in ABS or other off-balance-sheet operations.

However, after 7 months, JD Technology withdrew its IPO application.

Starting in 2021, JD.com began to focus on credit business, using micro-loan companies as original equity holders to handle ABS issuance.

Today, Bai Tiao still consists of both credit sales and credit components Xinfeng discovered that the first type of usage of Bai Tiao is buy now, pay later, which forms accounts receivable with the mall;

As of 2025, JD.com is still utilizing Bai Tiao receivables to issue ABS, but the scale has significantly contracted compared to before 2021.

The second type of usage is cash withdrawal, which requires signing a loan agreement and credit authorization, with the borrower being JD.com Microloan and partner banks or trusts.

This requires microloan companies to continuously expand their own capital scale.

Xinfeng's research found that as of May 28 this year, JD.com Microloan has issued and has outstanding ABS of 32.9 billion yuan; since 2024, the ABS issued to the exchange has reached 47.9 billion yuan.

Even among internet microloans, those preferring ABS like Du Xiaoman and Meituan Microloan have issuance scales that are far behind JD.com.

Credit Tension

Although JD.com’s credit business has continued to expand in recent years, it still only has a microloan license available for use.

Among many internet giants, Ant Group and Xiaomi both hold consumer finance companies, while ZhongAn and Tencent hold a high proportion of bank equity;

E-commerce companies that are fiercely competing with JD.com in price wars have also found their respective advantages in the ecological closed loop from traffic to finance.

For example, Alibaba has completed its financial layout across core platforms such as Taobao, Xianyu, and Fliggy, creating a comprehensive traffic diversion network;

Ant Consumer Finance, which is 50% owned by Ant Group, has formed a complete consumer finance ecosystem through services like Huabei and Jiebei.

Despite having only a microloan license, Douyin has developed a thriving intermediary lending business relying on its traffic advantage.

“If we talk about lending traffic diversion, the gap between JD.com and Douyin is still considerable,” a microloan company told Xinfeng, “In terms of traffic, Douyin can be said to ‘consume everything,’ making it difficult for any company to compete.”

In comparison, JD.com’s internet credit ecosystem is somewhat lacking in terms of licenses and traffic entry points;

Therefore, JD.com may have higher expectations for this hard-won consumer finance license.

To ensure decision-making power, JD.com made a significant investment of 3.25 billion yuan to acquire 65% equity in the consumer finance company, forming a rare controlling stake among internet giants, and achieved significant influence by occupying one-third of the board seats;

Now, JD.com Vice President Zhang Hanchun has been approved as the General Manager of JD.com Consumer Finance.

Liu Bin, Director of the Financial Research Office of the China (Shanghai) Pilot Free Trade Zone Research Institute, believes that JD.com Consumer Finance's entry will intensify market competition, promote industry growth, and facilitate the integration of technology and finance, optimizing the industry ecosystem.

Industry speculation suggests that after JD.com Consumer Finance completes its restructuring, JD.com may refer to the establishment of Ant Consumer Finance, separating the credit portion of Bai Tiao business and the Jin Tiao business from JD.com Microloan to JD.com Consumer Finance.

Focus on Licenses

The delayed consumer finance license is a microcosm of JD.com’s slow crawl in the large financial business.

Apart from conventional credit, JD.com currently still has three types of businesses: micro-savings, fund sales, and insurance

The financial license chips in its subsidiary composition have always been limited.

Before acquiring the consumer finance company, JD.com had third-party payment, property insurance, and small loan licenses, as well as licenses for fund sales and insurance brokerage.

Horizontally, JD Finance's territorial map is still weaker than that of other major companies.

For example, Ant Group holds Tianhong Fund, Yao Cai Securities, and has stakes in MyBank and ZhongAn Online, covering banking, insurance, funds, small loans, and other financial fields;

Tencent has completed its investment layout in the securities, banking, and insurance industries through stakes in Futu Securities, WeBank, ZhongAn Online, and other companies.

JD.com is not without the ambition to control more financial licenses.

Liu Qiangdong stated in 2017 that "one day we will apply for our own bank or hold a bank."

However, subsequent developments did not materialize.

In the context of stricter license issuance and higher entry barriers for internet institutions, it is reasonable that obtaining financial licenses is difficult;

Compared to other major companies, JD.com is relatively slow in financial businesses beyond credit.

For example, although there have been multiple rumors about JD.com’s intention to acquire a brokerage, they have all been quickly refuted;

Moreover, compared to Ant Insurance, which has long achieved platform development, JD.com has held property insurance and insurance brokerage licenses for many years, but only launched its one-stop insurance service under the new brand JD Insurance in 2023.

New Battlefield

Although the expansion of financial licenses in mainland China is not fast, JD.com is still making efforts in emerging fields.

The most typical example is the currently hot stablecoin business.

As a cryptocurrency that maintains its price stability by anchoring to fiat currencies and other external assets, stablecoins have smaller fluctuations and stronger universality compared to traditional cryptocurrencies like Bitcoin and Ethereum;

The Bank for International Settlements defines stablecoins as "cryptocurrencies that are pegged to the value of fiat currencies or other assets."

With the stability of pegging to fiat currencies and the characteristics of blockchain for real-time settlement, stablecoins have enormous usage potential in scenarios such as cross-border payments and supply chain finance.

For example, using stablecoins for cross-border payments can compress the time from the traditional SWIFT system's 3 days to seconds, while reducing fees by 90%, thus lowering exchange rate fluctuation risks and improving capital turnover efficiency.

In July 2024, the first batch of stablecoin issuer sandbox lists announced in Hong Kong included 5 institutions, among which is JD Coin Chain Technology (Hong Kong), a subsidiary of JD Technology Group.

JD Coin Chain Technology CEO Liu Peng stated before approval that stablecoins will provide mobile and PC products for retail and institutional clients;

When discussing the reasons for entering the stablecoin business, JD.com stated, "based on considerations for the group's overseas business development."

Although there have been rumors of Alibaba, Tencent, and other institutions also venturing into stablecoins, JD.com has indeed become the first major internet company in China to directly participate in stablecoin issuance.

The proactive layout for Web3 payment entry may release JD.com's ambitions for future internationalization. Previously, JD.com's stablecoin has entered the second phase of sandbox testing, with scenarios including cross-border payments, investment transactions, and retail payments.

For a long time, JD.com has regarded overseas expansion as an "important part of its growth strategy";

In recent years, overseas expansion has focused on "logistics infrastructure + direct brand operations," striving to build a global warehouse network and a "2-3 day delivery" time frame;

By the end of 2024, JD Logistics is expected to have over 100 bonded, direct mail, and overseas warehouses, covering 19 countries and regions.

"Under the guidance of JD's overseas business development strategy, we have conducted a detailed research and analysis of the Web3 field," Liu Peng stated, "and found that stablecoins can solve our own cross-border settlement issues and also serve other enterprises and the real economy."

In JD's global supply chain, stablecoins can be deeply integrated with logistics data and transaction records.

The imagination brought by real-time data is limitless.

For example, in the future, when multinational suppliers supply goods to warehouses, not only can the payment time be shortened from several days to several seconds, but they may also obtain instant financing based on on-chain transaction records, forming a closed loop of order generation, on-chain confirmation, and stablecoin disbursement.

Stablecoins are currently in a stage of diversified development.

With regulatory improvements and technological iterations, stablecoins are expected to upgrade to the core infrastructure of the digital economy, and by then, the effectiveness of JD's investment in stablecoins may become apparent