Trump administration officials have stepped up behind-the-scenes talks in recent weeks about possibly restricting the expansion of Ant Group’s Alipay and Tencent Holdings Ltd.’s WeChat Pay over concerns that the digital-payment platforms threaten national security, Bloomberg News reported on Wednesday.
The Trump administration’s potential restrictions on two Chinese payments giants would reverberate far beyond politics, potentially affecting multibillion-dollar deals, shaking up international commerce and even shaping the evolution of the global financial system.
If the administration proceeds, the most immediate hit would be to Ant Group’s plan for a stock listing in Shanghai and Hong Kong, a deal that could rank as the world’s largest initial public offering. Some international companies have been working with the payment apps and could see those strategies hurt or derailed. And while restrictions may ultimately head off potent competitors to U.S. and European banks, it could also — depending on how China responds — thwart their own planned expansion into the world’s second-largest economy.
For U.S. banks, the news comes with upsides and downsides. American bankers have long feared domestic consumers would one day embrace Chinese-style payment apps, which seamlessly allow people to shop, order takeout, pay bills and manage brokerage accounts using mobile phones. A variety of banks and technology companies have tried and failed to gain the kind of dominance allowing them to head off outside competition.
On the other hand, U.S. banks have been eyeing China as fertile ground for revenue growth.
MacDailyNews Take: As the report notes, the Trump administration’s guidelines for Tencent’s WeChat instant-messaging app may hint at to how the U.S. might handle payment platforms such as Alipay as the administration has allowed U.S. companies to continue working with WeChat outside of the U.S.
Note also, that in February 2019, Apple paired up with Jack Ma’s Ant Financial Services Group, the world’s largest financial-technology company, to give iPhone buyers in China an affordable purchase option: up to two years of interest-free financing via Alipay.