Regulators in China could force Tencent to integrate WeChat Pay into its newly created payment subsidiary, which could require the mobile payment service to obtain a new license, Bloomberg reported Friday, March 18, citing sources with inside information.
The potential move is part of China’s crackdown on tech companies last year, demanding that corporate divisions offering financial services be separated from the core business and regulated like a traditional bank.
As with Ant Group, regulators could force Tencent to divest its banking, securities, insurance and credit rating services to its separate financial holding company and operate separately from the company’s social media company, have said. indicated the sources.
See also: Chinese regulator orders tech firms to open ‘walled gardens’
WeChat Pay handles billions of dollars every day, but is only a transactional platform and does not extend loans. Removing its payment services would reduce its super app capabilities and overall convenience. The app has over a billion users and is among the most valuable companies in China.
Tencent’s payment license belongs to TenPay division, which is the main provider of wallet services on WeChat and QQ. Chinese regulators have concluded that this is insufficient to encompass the services included in WeChat Pay, the sources said.
Details of how the WeChat Pay decision would affect interoperability between the various platforms are still being worked out, the sources told Bloomberg. There will likely be additional capital requirements and more oversight by regulators. WeChat could also be forced to offer easy access to Alibaba’s Alipay.
The People’s Bank of China did not immediately respond to a request for comment and Tencent representatives declined, Bloomberg reported.
Read more: Tencent’s WeChat Pay envisions a future where payment options are the norm
Over the past decade, mobile payments have become the main payment method in mainland China, and WeChat Pay and Alipay have become the most popular ways to purchase goods and services. Late last year, WeChat announced that users now have the ability to share links from external sites, even Alibaba’s Taobao.