Ant Group, the world’s largest electronic payments platform, reorganized its business to comply with instructions from the Chinese central bank in April to separate its payment service Alipay from other services offering consumer loans.
The Hangzhou-based company, a subsidiary of that newspaper’s owner, Alibaba Group Holding, could create a separate mobile app for the lending business, currently operating under the Huabei and Jiebei brands, according to a report from the Financial Time. Ant Group officials did not respond to requests for comment on Monday.
Ant was called to a regulatory meeting by the People’s Bank of China (PBOC) in April, and said she had to cut her consumer loan ties as part of regulators’ expectations of how the group should restructure and rectify its businesses.
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“Ant must cut off inappropriate connections between Alipay and other financial products, such as Huabei and Jiebei, and rectify improper practices such as the integration of credit activities into payment links,” the PBOC said. The meeting was called to “demand that Ant face the serious problem of financial activities and realize the seriousness of its rectification.”
Launched in 2014 and 2015 respectively, Huabei and Jiebei offer consumer loans to Alipay users. Huabei, for example, allows Alipay users who don’t have a credit card to make online and offline purchases and repay the amount in monthly installments for up to 12 months.
Ant extends these lines of credit based on its internal credit assessment models. The bulk of these loans were financed by its partner banks, according to its draft prospectus filed with the Hong Kong Stock Exchange last year as part of its listing application.
Ant’s “super app” Alipay took such dominance in China that it prompted the PBOC to start developing its own digital currency, the e-yuan, as early as 2014, to counter its dominance. Currently, Alipay and WeChat Pay, which is owned by social media giant Tencent Holdings, account for over 90% of China’s third-party mobile payments market.
For the 12 months ended June 30 of last year, the total volume of payments made on Alipay reached 118 trillion yuan ($ 18.3 trillion), according to its draft prospectus. Its 72.5 billion yuan “credit technology” business, which includes Huabei and Jiebei, accounted for 39% of its revenue in the first half of last year.
In June, the To post reported that the China Banking and Insurance Regulatory Commission had approved a new license for Ant to conduct its consumer lending activities separately. As part of its overall restructuring, Ant will move both Huabei and Jiebei and its microcredit products under a dedicated unit called Chongqing Ant Consumer Finance.
Chinese regulators have launched their review of Ant and how it should correct its spread companies by thwarting – at the last minute – its planned initial public offering of US $ 34.5 billion last November due to systemic risks and privacy concerns. This failed IPO attempt has since led to a series of crackdowns aimed at curbing the dominance of Chinese internet groups and fintech platforms.
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