China’s biggest Internet companies such as Alibaba and Tencent may be forced to offer the payment options of their rivals.
Late last week, Chinese officials proposed new regulations in an effort to better regulate the country’s Internet sector, starting with new rules related to a wide range of topics, including censorship, cybersecurity and eCommerce, Reuters reported Friday (July 31).
By charging transaction fees, online companies that own payment systems have the potential to earn big profits. But the Chinese government is seeking to level the online payments playing field by putting the choice into the hands of consumers.
“Payment institutions should fully respect customer’s right to choose, and must not force customers to use the Internet payment service they provide, and also must not stop customers using other Internet payment services provided by other institutions,” said draft regulations posted on the People’s Bank of China’s website.
Theoretically, consumers would be provided with the ability to opt for payment options from other sites, such as social networking and online entertainment firm Tencent or search firm Baidu, while shopping on an Alibaba platform.
This move could shift the balance of power among China’s eCommerce giant, especially Alibaba affiliate Ant Financial Services Group, which currently holds the largest share of the market, Reuters explained.
“Ant Financial is looking to create a strong, driving force for the global Internet finance industry and build a new business ecosystem to achieve inclusive finance in the truest sense,” Ant Financial President Jing Xiandong said in an interview earlier this month.
With a slew of funding from major investors, Ant Financial has ambitions to be an online payments platform for more major partners — including restaurants, entertainment companies and health care providers. And as the trend is going, Ant Financial wants to put more of a stake into the growing popularity in online-to-offline services. Ant Financial has also been building on its Internet financial services, Caixin online reported.