The regulatory crackdown that has rocked China’s fintech industry since late 2020 appears to be coming to an end with the imposition of hefty fines on the country’s two digital payments giants.
Tencent, along with its payment subsidiary Tenpay, have been fined approximately 2.99 billion yuan ($410 million) by the People’s Bank of China for “past regulatory violations regarding the provision of payment services in mainland China,” the company said. in a filing on Friday.
On the same day, the central bank announced that it would fine Ant Group, Alibaba’s fintech subsidiary, 7.123 billion yuan (about $1 billion) for a range of illegal activities, including those involving the corporate governance, consumer protection, banking and insurance. , payments and settlements, anti-money laundering practices and fund sales.
Together, Alibaba and Tencent enjoy a duopoly in China’s digital payments market, as well as a range of other financial services offered through their respective payment platforms.
China’s crackdown on fintech is part of its broader efforts to rein in the growing power of its tech sector and subject it to greater regulatory scrutiny in rapidly emerging areas. At the end of 2020, China called off Ant’s IPO, which would have become the biggest IPO in history until then.
Since then, Ant has undergone a major restructuring that has significantly reduced the company’s overall influence in consumer credit. Jack Ma has reportedly relinquished his control over the fintech empire, and crucially, Ant’s core offerings are now subject to regulations that normally target traditional financial services.
At least in the fintech sector, China’s tech crackdown appears to be coming to an end, as the central bank noted in a statement:
“Currently, most of the significant problems in the financial activities of platform companies have been corrected. The focus of financial regulators has shifted from collectively correcting the fintech activities of technology platforms to monitoring the status quo.
The series of regulatory crackdowns in China’s tech industry has undermined investor and business confidence over the past three years. A clear end to corrective actions in fintech could inject new energy into the industry and revive investment interest. As for the fine, Tencent had this to say:
“The company believes that financial regulators will focus on standardizing regulation in the future, implementing financial policies and measures to promote the healthy development of the platform economy, and supporting and encouraging platform companies to continue their financial inclusion efforts.”