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How Chinese dockless bike-share firms are managing customers deposits?


How Chinese dockless bike-share firms are managing customers deposits?

BY   Alexandre Gauquelin   

After the collapse of major chinese dockless bike-sharing companies, we are starting to discover what the deposit are using for… According to the law, deposits should be kept untouched, as they have to stay available for direct refund if the user unsubscribes. But there is different ways to use it…


Wukong, Coolqi, Mingbike, Bluegogo… the list of bankrupted dockless bike-share companies is getting longer every month! It raises the question of the business model they believed in, and it includes the user deposit use. A common unknown raised by many observers was “are companies making money with user deposits?”.


Well it seems that yes, they are using it. For major companies, it is used for expansion. Despite having raised billions of US$ in 2017, Ofo only have cents of cash remaining: 53M US$! Of course, a never ending expansion is costly, as you have to produce millions of bikes with no cash advance. Both Mobike and Ofo are suspected to have spend around half a billion US$ from user deposits for paying suppliers, according to anonymous sources from both companies. Of course, they denied the accusations.


But the current disclosures coming from investigations and judicial proceedings about Mingbike and Bluegogo’s financial difficulties seem to strengthen the hypothesis of illegal use of the users deposits.

Mingbike “officially” became the first bike-sharing companies to be sued for misuse of the said deposits:


Guangdong Consumer Council filed the civil action on Monday against Guangzhou-based Mingbike, after more than 30,000 complaints made by customers left unable to reclaim their 199 yuan (US$29.87) deposits.


30 000 complaints for US$30, it’s already a million dollar! Mingbike went bankrupt last november, apparently taking away the users money…


Bluegogo, the main company to have faced bankruptcy recently, was claiming 20M users, for a total of around US$ 305M. And everything has been burned to follow Mobike and Ofo’s pace… No news of judicial proceedings again Bluegogo so far. Wait and see.


So be careful with your money. You have to know that your deposits are not staying quietly on your bike-share operator’s bank account , but it is used for business purpose. And if a company collapses, It’s very likely that you’ll never see your deposit again! Say goodbye…