Chinese officials have called in 13 tech companies to ask them to “rectify prominent problems” on their platforms, in a sign that the regulatory pressure on the fintech sector extends beyond Jack Ma’s Ant Group.
Tencent, ByteDance and the fintech affiliates of Baidu, JD.com, Meituan and Didi were among the 13 summoned to a meeting with officials from the People’s Bank of China and other Chinese banking, securities and foreign exchange regulators, according to the state news agency Xinhua.
Ant Group, which was asked earlier this month by the same group of regulators to restructure itself, was not called in again.
While praising the “overall positive” development of the fintech sector in recent years, the regulators complained of anti-competitive practices and harm done to consumers by the sector.
The regulators demanded that the platforms introduce similar changes to those imposed on Ant, in line with the recent guidelines issued to the fintech sector.
The new rules mean that the platforms will have to increase their capital to cover 30 per cent of the loans they offer jointly with banks.
Analysts have warned that the rules will raise financing costs for larger fintech companies and cause the overall sector to shrink significantly, but that some of the smaller players may enjoy more space to expand.
The “improper links” between payment services and other financial services must be broken, the regulators added — meaning that, for example, payment platforms cannot be used to overly promote loans, cutting off an important advertising channel for credit products.
Transparency over transactions must also be increased, they added. In contrast to the traditional state-owned banking sector, mobile payment platforms such as Tencent’s WeChat Pay, Ant’s biggest competitor, have shared much less transaction data with the government.
Companies must also apply for personal credit reporting licences to “break data monopolies”. Currently, only two government-led agencies hold such licences, and it is unclear what the government will demand from private companies in order to issue licences.
The regulators also demanded that the platforms better manage financial risk when making loans and investments.