Categories: World

China plans online payment rules that may hit Ant, Tencent

by BLOOMBERG

China proposed measures to curb market concentration in its online payment market, potentially dealing another blow to financial technology giant Ant Group Co. and its biggest rival Tencent Holdings Ltd.

The central bank said on Wednesday that any non-bank payment company with half of the market in online transactions or two entities with a combined two-thirds share could be subject to anti-trust probes, according to draft rules released by the People’s Bank of China.

If a monopoly is confirmed, the central bank can suggest the cabinet impose restrictive measures including breaking up the entity by its business type. Firms already with payment licenses would have a one-year grace period to comply with the new rules, the PBOC said.

The rules present the strongest and most detailed message yet of regulators’ plans to curb monopolistic practices in the online payments industry. Ubiquitous in China, Ant and Tencent have transformed how consumers shop through their mobile apps that are used by a combined 1 billion people.

The regulator also vowed “comprehensive” oversight of companies in the space, and their transactions with affiliated parties. It will step up supervision of any changes to shareholders or beneficiaries at payments firms, it said.

“This shows there’s no let-up in regulatory tightening on the sprawling fintech businesses,” said Dong Ximiao, a researcher at Zhongguancun Internet Finance Institute.

Regulators shocked markets in November by suspending billionaire Jack Ma’s record initial public offering of Ant as they stepped up oversight. Ant has since been ordered to overhaul its business and an antitrust investigation was launched into affiliate Alibaba Group Holding Ltd.

While they’ve stopped short of directly asking for a breakup of Ant, the central bank has stressed that the company needs to “understand the necessity of overhauling” and come up with a timetable as soon as possible.

Ma emerged in public on Wednesday for the first time since China began clamping down on his businesses, ending several months of speculation over his whereabouts. Global investors are still seeking clarity on what the future holds for the world’s largest fintech firm.

Mobile payments are only part of what contribute to online transactions, but they have become the most important platform in China. Alipay, the app operated by Ant, held 55.6% of the mobile payments market as of the second quarter last year, according to internet consultant iResearch. Tencent had a 38.8% share.

Room for growth in online payments is limited after years of a head-to-head rivalry between Ant and Tencent’s Wechat Pay. Total transactions were 59.8 trillion yuan as of June 30, up 8.8% from a year earlier, according to iResearch. That’s sharply down from increases of 23% and 65% during the same period in 2019 and 2018, respectively.

Highlights of China’s Draft Rules for Online Lenders Impact
Online lending companies like Ant would be required to provide 30% of funding for loans More capital needed; Ant holds about 2% of loans on its books
Firms to be banned from operating outside provincial bases without special approval from the banking watchdog. Permission, if granted, to be renewed every three years Require some firms to reapply for licenses; more frequent scrutiny
Those lending in multiple provinces to have 5 billion yuan of minimum registered capital More capital, greater scrutiny on operations
A shareholder cannot control more than one micro-lender operating nationally Limits expansion vehicle

 

Dayang Norazhar

Recent Posts

ASU guarantees pathways to admission for LA-area students impacted by wildfires

Flexible, streamlined, customized help for high school students TEMPE, Ariz., Feb. 14, 2025 /PRNewswire/ -- Thousands…

41 mins ago

SOUNDEXCHANGE APPLAUDS MORE THAN 300 MAJOR RECORDING ARTISTS ASKING LAWMAKERS TO PASS THE AMERICAN MUSIC FAIRNESS ACT

On World Radio Day, R&B Icons Boyz II Men deliver letter signed by Aerosmith, Celine Dion,…

42 mins ago

Unifor members win historic $15 million award in Wescast dispute

WINGHAM, ON, Feb. 14, 2025 /CNW/ - Unifor won a historic arbitration award totalling approximately…

42 mins ago

Reminder of Upcoming Annual and Special Meeting of Unitholders

Unitholders are reminded to vote their proxy prior to the proxy voting deadline of 10:00…

49 mins ago

Ledger Run Announces CEO Transition

Gary Lubin, Ledger Run's Founder and CEO, to retire and will continue on Board John…

49 mins ago

Food Safety Net Services (FSNS) Announces Valentine’s Promotion on 2025 Food Safety Training

Register Between Feb. 14-28 for 20% Off All Courses SAN ANTONIO, Feb. 14, 2025 /PRNewswire/…

49 mins ago