China’s PBoC urges digital payments antitrust probe on Alipay, WeChat Pay
- China’s central bank reportedly wants an antitrust investigation into the country’s two biggest digital payments operators
- It’s an unexpected move from a market whose regulators have been less than strict on the digital payments space
- Concerns are that dominant players are blocking new entrants to a lucrative market
Across the Pacific, four of the world’s biggest tech leaders were placed in the firing line of US Congress last week.
The heads of Amazon, Apple, Facebook and Google appeared remotely before US lawmakers in a bid to defend claims their companies against claims they abuse their influence and power to ‘crush’ the competition.
Now, the conversation around whether the world’s tech giants hold too much of a monopoly on their numerous, respective industries seems to have permeated an equally heavyweight technology market: China.
As reported by Reuters, China’s top antitrust agency is weighing up whether to launch a probe into Alipay and WeChat Pay, after the state’s central bank has claimed that the digital payments giants have used their powerful positions to quash the competition.
Information on WeChat Pay, owned by internet giant Tencent, and the Ant Pay-owned Alipay has been being gathered for the antitrust case for more than a month, according to sources gathered by the publication.
The initial examination comes as the Ant Group – an affiliate of Alibaba – is expected to go public, thought to be valued at possible excess of US$200 billion, which would make it one of the most highly-valued companies globally, and the world’s biggest unicorn.
The company – founded and controlled by Alibaba founder Jack Ma – is expected to spurn US stock exchanges, and instead opt for a dual listing in Shanghai and Hong Kong. But the looming scrutiny could prove to stymy those plans.
While sources said the antitrust committee has not yet made a decision on whether to proceed with an investigation, and there’s yet any indication as to when a call could be made, the agency is reported to be taking the recommendations from the People’s Bank of China (PBoC) “very seriously”.
The PBoC formally recommended that the State Council committee should look into antitrust issues posed by non-bank payment companies in Q2 this year. Ant Group and Tencent are allegedly lobbying government officials in an effort to prevent a probe, while none of the parties mentioned would comment.
If an investigation were to go ahead, it indicates a change of tone for China’s regulators, which have been less than stringent on the country’s digital payments space to date.
The antitrust case would be built around the impact of the two payment firms’ ubiquity in China. These payment solutions are massive within a market that is now all but cashless. In the last quarter of 2019, China’s mobile banking market logged around US$8 trillion worth of transactions, according to Analysys, which estimates that Alipay and WeChat Pay dominate 55% and 39% of the market respectively.
However, their dominance is thought to be stifling the entry of new, smaller players into the market. In efforts to encourage new entrants, the central bank has even said it plans to standardize interoperability of the main QR code technology in use.