Tech Sharing

Tech Sharing

Advertisement

Posts Tagged ‘ Tencent ’

China’s central bank has ordered online payment groups to operate through a centralized clearing house, a move likely to undercut the dominance of Ant Financial and Tencent by forcing them to share valuable transaction data with competitors.

 

China is the world leader in mobile payments, with transaction volumes rising nearly fivefold last year to Rmb59tn ($8.8tn), according to iResearch. They are now widely used for everything from high-street shopping to peer-to-peer lending. 

 

In addition to generating fees directly, online and mobile payments are a source of valuable data that can be used for such purposes as targeted advertising and credit scoring. 

 

Now the People’s Bank of China is requiring all third-party payment companies to channel payments through a new clearing house by next June, according to a document sent to payment companies on August 4 and seen by the Financial Times. 

 

“The launch of this clearing house is a one-sided loss for the payment institutions. Originally, payment data were proprietary information for them. Now it’s connected to the clearing house, which will probably share it with other partners,” said Zhang Yi, fintech analyst at iResearch, a consultancy.

 

Ant Financial, the financial services affiliate of Alibaba Group, is the market leader in mobile payments, with its Alipay unit processing 54 per cent share of all transactions in the first quarter of the year, according to iResearch. WeChat Pay, linked to Tencent’s mobile messaging app, held a 40 per cent share. 

 

Mr Zhang believes the central bank wants to aid commercial banks in obtaining customer data and prevent Alipay and Tencent from gaining excessive market power. 

 

Hundreds of millions of Chinese consumers and businesses have linked their Alipay or WeChat Pay accounts to their commercial bank accounts, enabling third-party payments to be credited and debited seamlessly. 

 

But, unlike swiping a bank card, when an Alipay or WeChat user makes a purchase, banks do not obtain crucial payment details such as the merchant’s name and location. Instead, the bank record shows Alipay or WeChat as the recipient. 

 

Currently, payment groups maintain separate bilateral relationships with commercial banks to facilitate payments to or from users’ bank accounts. But the latest PBoC instructions require all payment companies to connect to the clearing house by October 15 and to channel all payments through it by June 30, according to the document. 

 

“We are actively participating in the preparation work and will complete the adjustment according to the requirements of central bank,” Ant Financial spokesman Anna Wang told the FT. 

 

The PBoC and Tencent did not respond to a request for comment on Wednesday. 

 

Seven units of the PBoC own 37 per cent of the clearing house, known as the Online Settlement Platform for Non-Bank Payment Institutions, according to Caixin, a financial news website. Payment units of Ant Financial and Tencent each own 9.6 per cent, while 36 smaller third-party payment companies own the remaining equity. 

 

Established last year, the clearing house has capital of Rmb2bn. It began testing in March and around 300 commercial banks are already connected. 

 

Beyond data sharing, the new clearing house will also enable the PBoC to monitor online payments directly without requesting data from processors, strengthening their ability to detect money laundering and other illicit transactions. 

 

“Some third-party payment companies have used their licences to create channels for illegal payments. There really is a need to strengthen anti-money laundering and other regulation,” said Wang Pengbo, analyst at Analysys International.

 

Tencent has opened its credit scoring system to limited group users on QQ, WeChat’s older sibling.

 

This marks a big step forward for Tencent:  not only does this fill in a glaring gap in their product lineup, it also puts them in direct competition with Alibaba’s Sesame Credit.

 

According to previous screenshots from early testers, the credit scores—ranging from a maximum of 850 points and a minimum of 300 points—were calculated from five indexes: social connections, security, wealth, the ability to honor an agreement, and consumption behavior.

 

Social data constitutes a major part of Tencent Credit’s rating system. The data collected from WeChat and QQ—which claim 900 million and 860 million monthly active users respectively. The consumption data was mainly gathered through Mobile QQ and WeChat payment.

 

Tencent is also partnering with financial institutions like WeBank, China Construction Bank and local service institutions for complementing the credit rating mechanism.

 

Both Alibaba and Tencent have set early sights on the credit scoring sector, an essential component for financial services to solve the rising online security issues by leveraging big data. In 2014, when Alibaba’s Ant Financial was tinkering on Sesame Credit, Tencent also laid out in the sector with plans to launch a similar product. Both the companies obtained government approval to run their consumer credit rating services two years ago. 

 

Wechat Pay

Tencent’s WeChat Wallet service is now available to users in Hong Kong — just as Apple is working to release its mobile payment system in the city later this year.

Hong Kong users who are part of the pilot programme will be able to link their Hong Kong credit cards to the service and purchase items using the WeChat app including movie and flight tickets.

A source close to the company said it may take “several months” before the payment service is rolled out to all WeChat users in the city. However, local users of WeChat Wallet now lack full access to all the features enjoyed in mainland China. For example, Hong Kongers are not able to transfer money to friends within the app or make in-store payments by having the cashier scan a QR code on their smartphone in a convenience store. Also missing is the Red Packet function, which allows WeChat users in China to send an amount of money to a group chat that is either identically or randomly split among other users who open the virtual red packet.

A Tencent spokesperson declined to comment on whether these features will eventually be made available to users in Hong Kong.

WeChat has already rolled out its WeChat Wallet service in South Africa, its first international market, where users can send money to each other and pay for purchases on their mobile device at over 24.000 merchants in the country. The company also rolled out cross-border payments for WeChat users in China, which allows them to pay for purchases made overseas using WeChat Wallet.