US explores restrictions on Ant Group, Tencent payment platforms

Ant Financial

The United States is considering limitations on China’s Ant Group as well as Tencent over concerns their digital payment platforms undermine national security, Bloomberg News has reported.

Such a move would mark a new deterioration in relationships between the world’s two biggest markets, that have been stained by disputes over trade, Hong Kong’s autonomy, cyber security and the spread of this novel coronavirus.

The measure would also exemplify how President Donald Trump’s administration is now seeking to prevent Chinese firms from engraining themselves in the US financial system before they become a significant threat.

In the last year, the United States has cracked down on Huawei Technologies and TikTok after initially allowing the Chinese-owned companies to become major players in US telecommunications infrastructure and social websites, respectively. US officials have expressed concerns that these firms might be passing the information of US taxpayers to China’s Communist Party government.

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Both Ant’s Alipay and Tencent’s WeChat payment platforms are utilized chiefly by Chinese citizens holding account in renminbi. The majority of their interactions with the United States are with US retailers accepting payments from Chinese travellers and businesses.

Talks over how and whether to limit Ant Group and Tencent’s payment systems have picked up rate among elderly US officials in recent weeks, though a final decision is not imminent, Bloomberg reported, citing people familiar with the matter.

“Ant Group’s business is primarily in China and we are excited about our growth prospects in the China market. Our mission is to contribute to economic growth and job creation through serving ordinary consumers and small businesses,” the firm said.

Tencent and the White House did not immediately respond to requests for comment.

The US government has been taking different actions against Tencent’s WeChat app. Last week, the US Justice Department stated it would appeal a judge’s decision to prevent the government from barring Apple and also Google from providing WeChat for downloading in US app stores.

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Ant Group, backed by Chinese e-commerce giant Alibaba, plans to record concurrently in Hong Kong and on Shanghai’s STAR Market this month at what could be the world’s biggest initial public offering, exceeding oil giant Saudi Aramco’s $29.4 billion float in December.

The financial technology firm is seeking to raise about $35 billion after assessing early investor interest and according to a higher valuation of roughly $250 billion or more, journalists at our partner news agency Reuters has reported.

Shares of Alibaba, which owns a third of Ant, held up on the information and ended trading up 1.4% at $296.50 in New York on Wednesday, suggesting that investors did not see any immediate financial fallout to the provider. Ant derives 95% of its revenue from China.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Noor Zainab Hussain and C Nivedita in Bengaluru. Editing by Maju Samuel and Cynthia Osterman.

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