The regulatory crackdown that has shaken up China’s fintech industry since late 2020 appears to be coming to a close with the imposition of hefty fines on the country’s two digital payments giants. Tencent, along with its payments subsidiary Tenpay, has been fined approximately 2.99 billion yuan ($410 million) by the People’s Bank of China for “its past regulatory breaches in relation to the provision of payment services in the mainland of China,” the company said in a filing on Friday. On the same day, the central bank announced that it will pay Ant Group, Alibaba's fintech subsidiary, 7.123 billion yuan (about $1 billion) for several illegal activities, including those related to corporate governance, consumer protection, banking and insurance, and payments settlement, bankruptcy proceedings, and bankruptcy.
Together, Alibaba and Tencent enjoy a duopoly in China's digital payments market, with many other financial services offered through their payment platforms. China's foray into fintech is part of its broader effort to capitalize on the growing power of its tech sector and tap into greater regulatory scrutiny in the rapidly emerging sector. At the end of 2020, China canceled the Ant IPO, which will be the largest IPO in history until then. Since then, Ant has gone through a major restructuring that has reduced the company's impact on customer revenue. It has been reported that Jack Ma has given up his control of the fintech empire, and most importantly, Ant's offerings are now subject to the same rules as traditional financial services.
At least in the fintech sector, China’s tech clampdown seems to be reaching a conclusion, as indicated by the central bank in a statement: “Currently, most of the prominent problems in the financial business of platform enterprises have been corrected. The focus of the financial regulators has shifted from collectively rectifying the fintech businesses of tech platforms to business-as-usual supervision.” The series of regulatory crackdowns across China’s tech industry has dampened investor and business confidence over the past three years. A clear end to the corrective actions in fintech could inject new energy into the industry and reignite interest in investments. As for the fine, Tencent had this to say: “The Company believes the financial regulators will focus on normalised regulation going forward, implementing financial policies and measures to promote the healthy development of the platform economy, and supporting and encouraging platform companies to continue their efforts in financial inclusion.”
