Chinese regulators have ordered a comprehensive reform of Alipay, China’s largest payment app, as the ruling Communist Party tries to control the “unruly growth” of the tech giants.
The Financial Times reported on Monday that Alipay, which has more than 1 billion users in China and other Asian countries including India, was told to divest its profitable microfinance business, citing people familiar with the matter.
Currently, the app allows users to use traditional credit cards associated with banks to pay, or to provide small unsecured loans to buy anything from toilet paper to laptops.
Alipay’s parent company, Ant Group, is China’s largest payment service provider.
After founder Jack Ma criticized officials for stifling innovation, regulators cancelled the fintech group’s record-setting $37 billion (approximately Rs 2,279 crore) stock listing in November.
Jack Ma’s business empire has always been the target of a broader crackdown on technology companies that aim to break monopolies and strengthen data security, which has reduced the company’s valuation by billions of dollars.
Since the crackdown began, the outspoken billionaire has been in the spotlight to a large extent.
Two sources familiar with the arrangement told the Financial Times that after the separation of payment and loan business, Alipay will have to transfer customer data used to make loan decisions to a new credit scoring joint venture. The enterprise part is a state-owned enterprise.
Alipay did not immediately respond to AFP’s questions about how the order will affect its business.
Ministry of Industry and Information Technology spokesman Zhao Zhiguo said at a press conference on Monday that regulators also required Jack Ma’s e-commerce platform Alibaba and other Internet companies to stop blocking links to rival services.
The Chinese market regulator announced a rule last month aimed at eliminating so-called “walled gardens” built by technology companies to lock users in their services.
“Restrictions.. The access to the website links is unreasonable. It not only affects the user experience, but also harms user rights and disrupts market order,” Zhao said.
“Users reacted strongly to this.”