Chinese officials have asked 13 of the country’s largest tech companies to “rectify significant issues” on their platforms, a sign that regulatory pressure on the fintech industry is spreading beyond Jack Ma’s Ant Group.
Tencent, ByteDance and fintech subsidiaries of Baidu, JD.com, Meituan and Didi were among the group called to a meeting with officials from the People’s Bank of China and other banking, securities and currency regulators, according to the official Xinhua News Agency.
Ant Group, which was ordered to restructure this month, was not recalled.
While welcoming the “generally positive” development of the FinTech industry in recent years, regulators have complained about anti-competitive practices and harm to consumers.
Officials demanded that the platforms increase their capital to cover 30% of the loans they jointly offer with banks, after forcing similar changes on Ant. The measurements were in accordance with the recent directives issued to the broader fintech sector.
Analysts have warned that the rules will increase funding costs for large fintech firms and cause the industry to contract significantly. But they added that some smaller players could benefit more opportunity to develop.
The “inappropriate links” between payment services and other financial services must be severed, regulators said. This included not allowing payment platforms to promote loans too aggressively, cutting off an important advertising channel for businesses.
Officials also called for greater transparency in transactions. Unlike traditional public banking, mobile payment platforms like WeChat Pay from Tencent, Ant’s biggest competitor, share much less transaction data with the government.
Businesses must also apply for personal credit report licenses to “break data monopolies.” Only two government-run agencies hold such licenses and it is unclear what the government’s requirements would be on private companies to issue licenses.
Regulators have also demanded that the platforms improve financial risk management when granting loans and investments.
Shares of Chinese tech groups that trade in Hong Kong fell on Friday morning. Meituan fell 3.1%, Tencent 1.4% and JD.com 2.8%.
Regulators stopped Ant Group predicted a $ 37 billion IPO last year, which would have been the largest ever public listing in the world. Jack Ma, founder of Ant and one of China’s best-known entrepreneurs, has largely disappeared from sight since the list was sabotaged.
Beijing now appears to be extend his examination to other Chinese technology companies, which have increasingly ventured into financial products.
WeChat Pay and Alipay, Ant’s payment app, were launched to allow users to purchase goods and services, but have evolved into platforms offering loans, investments, and insurance.
JD.com, the online retailer, also has a consumer credit service, while ridesharing company Didi launched crowdfunding and loan products in 2019.