[Asia Economy Reporter Cho Hyun-ui] Chinese authorities announced a draft regulation on electronic payment companies on the 21st, just one day after Jack Ma, founder of Alibaba Group, reappeared after three months.
According to Hong Kong Ming Pao and others on the 21st, the People's Bank of China, the central bank, announced a draft of the "Non-bank Payment Institution Regulations" after the stock market closed the previous day, specifying definitions of electronic payment service types, business scope restrictions, and regulations on monopolies.
The authorities classified electronic payment services into two main categories: account opening and payment services, and stated that electronic payment companies are prohibited from providing credit loans. This is the first time Chinese authorities have introduced monopoly-related regulations for non-bank electronic payment service providers.
In the online payment market, if a single legal entity's market share exceeds 50%, or if two legal entities' combined market share exceeds two-thirds, they become subject to antitrust investigations. If deemed monopolistic, the People's Bank of China can initiate an investigation and request the relevant company to be split by the authorities.
This measure is interpreted as targeting Alibaba Group, including Ant Group, the world's largest fintech company. As of June last year, Alipay, an electronic payment application operated by Ant Group, held a 55.4% share of China's mobile payment market. In contrast, competitor Tencent Group's WeChat Pay held a 38.5% market share.
The draft regulation specifies that "the same actual operator cannot operate two or more legal entities," effectively targeting Alipay's small credit loan services "Jiebei" and "Habei."
The Hong Kong South China Morning Post stated, "This draft is part of Chinese authorities' efforts to rein in the rapid growth of non-bank players in the payment market." It also pointed out, "However, the People's Bank of China has not clearly stated how it will evaluate the market share of non-bank entities."
Jack Ma, who disappeared after his speech at the "Waitan Financial Summit" held in Shanghai on October 24 last year, reappeared the day before after three months. At that time, he criticized China's financial supervision in front of senior Chinese officials, saying, "There is no innovation without risk in the world." Following Ma's reappearance, Alibaba's stock price surged 8.5% on the Hong Kong stock market the previous day.
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