China plans online payment rules that may hit Ant, Tencent


The People's Bank of China is drafting new rules stating 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 antitrust probes. — Reuters

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 antitrust probes, according to draft rules released by the People’s Bank of China (PBOC).

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 one 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. "The rules fill the void of defining market monopoly in China’s payments industry.”

Alibaba Group Holding Ltd, which holds stake in Ant Group, fell 2.1% in Hong Kong as of 9.32am after rallying 8.5% on Wednesday. Tencent gained 2.9%.

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 (RM37 trillion) 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. – Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Jack Ma

   

Did you find this article insightful?

Yes
No

100% readers found this article insightful

Next In Tech News

Putin calls for internet bound by moral rules, criticises opposition rallies
Qualcomm takes aim at Apple with line of wireless audio chips
Exclusive: Apple faces EU antitrust charge on Spotify complaint - sources
Explainer: Honda unveils its new level 3 technology, but how does it work?
Exclusive: Amid shortage U.S. suppliers to Chinese chip giant SMIC struggle to get export licenses
WhatsApp adds voice and video calling feature to desktop version
Exclusive: U.S. suppliers to Chinese chip giant SMIC slow to get export licenses
Global semiconductor shortage spurs run on vintage chipmaking tools
'I will shoot whoever I see': Myanmar soldiers use TikTok to threaten protesters
Twin sisters score Japan’s hottest IPO by making games for women

Stories You'll Enjoy


Vouchers