Chinese e-commerce giant Alibaba and rival Tencent are looking to take advantage of liberalisation in the country’s banking regulations, starting with credit cards.

Alibaba will next week issue one million virtual credit cards via its Alipay arm.

The card will be available in Alipay’s mobile wallet app and is backed by China’s Citic Bank. It can be used both online and in physical stores and creditworthiness is assessed by a user’s online shopping habits.

However, cardholders can only make online transactions on websites which accept Citic credit cards.

Meanwhile rival giant Tencent is planning its own virtual credit card. It will also issue one million virtual cards backed by Citic Bank. Its other partner is Zhong An Online Property Insurance.

Tencent transactions are possible both online and offline at retail outlets that support the scanning of QR codes for its Weixin payments service.

Both Alibaba and Tencent are likely to be among companies which eventually win banking licences under a pilot to create five banks backed by private companies, said Financial Times. The scheme was announced this week by China’s banking regulator.