The powerplay between Chinese authorities and the country’s two major digital payment platforms, Tencent’s WeChat Pay and Ant Group’s Alipay is set to further tighten the noose on the firms after the Chinese central bank unveiled draft rules for non-banking payment institutions.
The new draft reportedly contains harsher measures against payment monopolies which are already under severe scrutiny amid an ongoing anti-monopoly investigation and proposals within the Chinese government for tougher anti-monopoly regulations.
In a statement, the country’s apex bank The People’s Bank of China (PBC) stated that preventing financial risks in the payment arena is a key part of efforts to avoid systemic financial risks.
The new rules are expected to create an overarching regulatory framework for the oversight of payment agencies and their business operations and affiliated transactions.
Both Alipay and WeChat have been leading the digital payment revolution in China but the authorities are now scrutinizing their market dominance. The latest draft rules are the latest in a series of antitrust efforts that the country’s regulators have taken to control the firms.
The trigger to the ‘superlative’ scrutiny and new measures to control these firms are said to be the public criticism Alibaba Co-founder Jack Ma made about China’s financial regulator in October 2020.
His statements did not go well with the country’s authorities and said to have resulted in the last-minute supposedly postponement of the highly anticipated Ant Group IPO. Amid the frenzy, Jack Ma chose to remain absent on the public domain and it was only recently that he reportedly came back from the hiatus.
US-based financial data provider PitchBook reports that Alibaba and its affiliates Alibaba Capital Partners and Ant Group (earlier known as Ant Financial) have made investments in excess of $2 billion in Indian companies since 2015.
Meanwhile, another financial data provider Venture Intelligence has revealed that Chinese investors (including Tencent) have poured over $5.7 billion into the Indian start-up ecosystem in the last 5 years.