Trump administration officials have stepped up behind the scenes in recent weeks to limit, if possible, the expansion of Ant Groups Alipay and Tencent Holdings Ltd.’s WeChat Pay over concerns that digital payment platforms threaten national security. Bloomberg News reported Wednesday.
Lulu Yilun Chen and Jennifer Surane for Bloomberg:
The Trump administration’s potential restrictions on two Chinese payment giants would resonate far beyond politics, potentially affect billions of dollars, shake up international trade and even shape developments in the global financial system.
If administration continues, Ant Group’s plan for an IPO in Shanghai and Hong Kong will be an immediate hit, an agreement that could rank as the world’s largest IPO. Some international companies have worked with the payment apps and could see that these strategies were damaged or derailed. And while restrictions may ultimately avert potential competitors to US and European banks, it may also – depending on how China responds – hinder its own planned expansion into the world’s second largest economy.
For US banks, the news comes with cons and cons. U.S. bankers have long feared that domestic consumers will one day embrace Chinese-style payment apps that seamlessly allow people to shop, order takeaways, pay bills and manage brokerage accounts using cell phones. A number of banks and technology companies have tried and failed to achieve the kind of dominance that allows them to go out of competition.
On the other hand, US banks have seen China as a breeding ground for revenue growth.
MacDailyNews Take: As the report notes, the Trump administration’s guidelines for Tencent’s WeChat instant messaging app may suggest how the United States can handle payment platforms such as Alipay, as the administration has allowed U.S. companies to continue working with WeChat outside the United States.
Also note that in February 2019, Apple teamed up with Jack Ma’s Ant Financial Services Group, the world’s largest financial technology company, to provide iPhone buyers in China with an affordable purchase option: up to two years of interest-free financing via Alipay.