The Chinese government stepped up scrutiny of Tencent’s ubiquitous mobile payment unit, with Phoenix News reporting authorities are mulling requiring the internet giant to make WeChat Pay part of a new financial holding company and secure a separate payment licence.
If the move is approved, WeChat Pay would be split from the main social media unit, potentially reducing the ease of using the payment service in Tencent’s mobile offerings and weakening the appeal of the WeChat app, the local news service wrote.
Regulators previously demanded Tencent combine its banking, securities, insurance and credit-rating services into a separate holding company, subject to the same regulation as traditional banks.
Authorities also are looking to tighten the rules covering WeChat Pay’s services by requiring a new licence, Phoenix News stated.
The Wall Street Journal reported earlier this week that Tencent faces a possible record fine after authorities alleged WeChat Pay violated anti-money laundering rules.
In 2021, Chinese authorities ordered a restructure of Alibaba’s financial arm Ant Group into a financial holding company to address government-mandated changes requiring it to cut links between Alipay and other financial units.
Over the past 18 months, authorities initiated a raft of restrictive rules covering recommendation algorithms, competition, overseas listings and online gaming.
But the increased scrutiny appears to be winding down.
Richard Windsor, founder of research blog Radio Free Mobile, noted in a blog that China’s vice premier Liu He had signalled during a financial stability meeting that regulators were ordered to end the prolonged crackdown of the tech sector, with the aim of encouraging growth at a time of rising inflation and supply chain bottlenecks.
Windsor added while the state had indicated things are not going to get worse, it has not repealed any of the recent regulations.