The People’s Bank of China, the nation’s central bank that regulates financial institutions, has alleged the digital payment companies have used their strong positions to crush competition, sources told the news service.
For more than a month, the government’s antitrust watchdog has been gathering information on Ant Group’s Alipay, the online payments arm of Alibaba Group Holding Ltd., China’s eCommerce superstore, and WeChat Pay, a division of Tencent Holdings Ltd., Reuters reported.
There are estimates that the companies capture all but 6 percent of the digital payment market with Alipay at 55 percent while WeChat Pay has 39 percent. COVID-19 and its aftermath moved the country from cash to online payments. The mobile banking market reported 56.2 trillion yuan ($8 trillion) worth of transactions in the fourth quarter of 2019, according to Analysys Mason, the London-based global research firm.
An investigation could chill prospects for Ant Group’s plans to file an initial public offering (IPO) on Shanghai’s Nasdaq-style STAR Market and the Hong Kong Stock Exchange.
Last week, the company said the dual China listings would fuel its mission to speed digitization of the nation’s service industry, drive domestic demand, position it to develop global markets and further invest in technology and innovation. If approved, the combined offering, with a valuation of more than $200 billion, is likely to be one of the largest in history.
“Becoming a public company will enhance transparency to our stakeholders, including customers, business partners, employees, shareholders and regulators,” Ant Group Executive Chairman Eric Jing said in the announcement. “Through our commitment to serving the under-served, we make it possible for the whole of society to share our growth.”
The sources, who insisted on anonymity, said the State Council is reportedly taking the central bank’s recommendation seriously, but deliberations are confidential. Meanwhile, the two companies are asking the government to prevent a probe, the news service reported.
The State Council, the central bank, Ant and Tencent did not respond to requests for comment.