Chinese authorities are considering requiring Tencent to include its WeChat Pay system in a newly created financial holding company. The move is a part of an overhaul that may necessitate a new license for the ubiquitous mobile payments service, Bloomberg reported on Friday, citing people familiar with the matter.
WeChat Pay handles several billions of dollars worth of business every day, but it is a trading platform, not a lender. Bloomberg’s source said Tencent faces requirements similar to those of Ant Group to integrate its banking, securities, insurance and credit scoring services into a financial holding company, regulated like traditional banks.
The potential move would present a fresh hurdle for Tencent, which along with other internet firms, was told in 2021 to cordon off financial services from its main business.
Moreover, regulators also believe that Tencent’s current payments license owned by its TenPay unit, the back-end provider of wallet services on WeChat and QQ, is insufficient to cover WeChat Pay’s services. The new requirement will allow the payment service and the large amount of data it generates every day to be supervised by new regulators such as the Central Bank of China.
For Tencent, including WeChat Pay in the financial entity adds new uncertainty to the restructuring of the payment business since it is an integral feature of the company’s main app, WeChat. The app is used by a billion-plus people and relies on the backend support from a variety of different divisions. Any move to reduce the convenience of WeChat risks weakening the attractiveness of its current tightly integrated feature set.