Chinese Internet conglomerates are coming out with virtual credit card services to facilitate smoother digital transactions as they vie for a bigger share of their respective payment niches.

Alibaba Group Holding Ltd and Tencent Holdings Ltd both announced on Tuesday that they will allow "payment by credit" for users of third-party payment processors Alipay and Tenpay.

Both firms are partnering with mid-sized lender China Citic Bank Co. Tencent also is teaming up with Zhong An Online Property Insurance Co, a joint venture co-invested by the pair along with Ping An Insurance (Group) Co of China Ltd, the world's second-largest insurer.