The news: Chinese regulators are reportedly looking into requiring Tencent to add WeChat Pay to its financial holding company, sources familiar with the matter told Bloomberg.
Key context: Last May, authorities ordered Tencent to set up a financial holding company to house all of its banking, securities, insurance, and credit-scoring services. The entity would be regulated like a bank to give authorities a clearer picture of Tencent’s financial operations.
Why this matters: WeChat Pay is an integral part of the WeChat super app, which this year is expected to reach 811 million users, accounting for more than half (57.9%) of China’s population, per Insider Intelligence forecasts. The mobile wallet provides the transaction infrastructure that lets WeChat users do everything from sending peer-to-peer payments to paying bills and booking flights.
The bigger picture: While not definite, an order to bring WeChat Pay under Tencent’s financial holding company would extend the government’s crackdown on Tencent and other Chinese tech powerhouses.
It also coincides with Beijing building out its central bank digital currency (CBDC)—it recently updated a pilot version of its CBDC wallet that adapts to Apple’s latest mobile software. The parallel actions reflect the government’s efforts to regain control of its financial system.
Related content: Want to learn more about what China’s regulatory crackdowns mean for mobile payments? Check out our “China Mobile Payments Forecast 2021” report.
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