Chinese bike-hire startup ofo Inc is testing deposit waivers for qualified riders in Shanghai, a move observers said would further intensify the already heated competition in the sector.

By teaming up with Sesame Credit, a social credit rating unit under Ant Financial Services Group, ofo allows customers with a Sesame Credit of 650 points or higher in Shanghai to enjoy the bike-hire service without paying the 99 yuan ($14.4) deposit, ofo co-founder Zhang Siding said on Thursday.

Users scan the QR code on the bikes using Alipay, the e-wallet run by Ant Financial, and choose to "skip the deposit" should they pass the credibility threshold, said Hu Tao, general manager of Sesame Credit.