SINGAPORE/HONG KONG, July 31 (Reuters) - China's top
antitrust agency is looking at whether to launch a probe into
Alipay and WeChat Pay, prompted by the central bank which argues
the digital payment giants have used their dominant positions to
quash competition, sources with knowledge of the matter said.
The State Council's antitrust committee has been gathering
information on Alipay, owned by Ant Group which in turn is an
affiliate of Alibaba Group Holding Ltd, as well as on
Tencent Holdings Ltd's WeChat Pay for more than a
month, they said.
Any investigation would likely dampen enthusiasm for Ant
Group's planned dual listing in Hong Kong and Shanghai that is
seeking a valuation of more than $200 billion.
The antitrust committee has not made a decision about
whether to proceed with an investigation, the sources said, and
it was not clear when a decision might be made. One source said
the committee is taking the People's Bank of China's
recommendation "very seriously".
The sources, who declined to be identified as the policy
deliberations were confidential, also said that Ant and Tencent
are lobbying government officials in an effort to prevent a
The State Council Information Office and the central bank
did not respond to requests for comment. Ant and Tencent did not
respond to requests for comment on the potential probe.
The People's Bank of China formally recommended sometime in
the second quarter that the State Council committee should look
into antitrust issues posed by the country's non-bank payment
companies, one of the sources said.
GIANTS IN THEIR FIELD
If the State Council antitrust committee decides to go ahead
with a probe it would mark a change of tack for regulators.
"I do find it surprising as the Chinese regulators have
pretty much taken a wait and see approach and only lightly
regulated China's digital payments space since they started in
2004," said Zennon Kapron, director of Shanghai-based financial
industry research firm Kapronasia.
"This is also the first time that they are looking at Alipay
and WeChat Pay from an anti-trust perspective," he added.
Alipay and WeChat Pay services, which enable payments at the
convenience of a code scan, have become ubiquitous in daily life
in China, with many people now rarely using cash.
The country's mobile banking market logged some 56.2
trillion yuan ($8 trillion) worth of transactions in the last
three months of 2019, according to domestic consultancy
Analysys. It estimates Alipay commands 55% of the market and
that Tencent's fintech business, most of which is WeChat Pay,
But authorities have been keen to whittle back their
dominance. In an effort to encourage smaller players to enter
the market, the central bank said last year it planned to
standardise the interoperability of QR code payments.
China's legislative body is also debating major revisions to
its antitrust laws for the first time in more than 11 years,
which are set to include expanded criteria for judging a
company's control of a market.
One of the world's most valuable unlisted companies, Ant
generated about $2.2 billion in profit in the fourth quarter,
according to Reuters calculations based on figures from Alibaba
regulatory filings. Its main service Alipay has more than 900
million users in China.
WeChat Pay had over 800 million monthly active users in the
fourth quarter, according to Tencent's 2019 annual report.
($1 = 7.0080 Chinese yuan)
(Reporting by Keith Zhai in Singapore and Julie Zhu in Hong
Kong; Editing by Edwina Gibbs)