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US mulls curbs on China’s WeChat Pay, Alipay Platforms: Report

Alipay and WeChat pay signs in BurgerKing ZBAA (N509FZ/WikiCommons)
October 10, 2020

This article was originally published by Radio Free Asia and is reprinted with permission.

The United States is looking at possible restrictions on two Chinese-owned digital payment platforms, amid national security concerns, according to recent media reports.

The Trump administration is considering imposing curbs on Ant Group, owned by Chinese billionaire Jack Ma, and Tencent, amid concerns that their Alipay and WeChat Pay features could pose a security threat, Bloomberg reported this week.

U.S. officials are concerned that Ant Group and other Chinese fintech platforms will come to dominate global digital payments, Bloomberg cited “people familiar with the matter” as saying.

Such platforms could soon be used internationally, potentially giving the Chinese government access to the banking and personal details of hundreds of millions of people, the agency reported.

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Tzeng Yi-suo, head of cyberwarfare and information security at the Institute for National Defence and Security Research on the democratic island of Taiwan, said there are concerns that the information sent to China would be people’s real names and other details.

“[China’s] digital payment systems are real-names only,” Tzeng said. “It’s a bit different if you are in a democracy.”

But he said it would be hard to find legal justification for such restrictions, in the absence of any law-breaking by the companies concerned.

“They are going to expand their digital services,” he said. “But on the other hand, neither Tencent nor Ant have done anything illegal.”

“They would have to prove national security risks before they could impose any restrictions on them.”

Francis Fong, honorary chairman of Hong Kong’s Information Technology Federation, agreed that Tencent and Ant are looking to expand the use of WeChat Pay and Alipay internationally.

“Alipay has already started operating in countries and regions outside China including Japan,” he said. “Right now Alipay and WeChat Pay are on an upward trajectory.”

Big US market

He said the loss of the U.S. market could be huge for the companies.

“Tencent may have said that [the U.S.] only accounts for a small percentage of its overall business, but … all of Alipay and WeChat Pay’s competitors are based in the U.S., namely, Visa, Mastercard, Apple Pay and Google Pay,” he said. “The U.S. market is pretty big.”

Fong said electronic payments are generally linked to the acquisition of customer personal data, and that data acquisition isn’t just a feature of Alipay and WeChat Pay.

“Visa and Mastercard will also take these records and analyze them,” Fong said. “The data can include the colors that customers like, what they like to eat, stuff like that. They publish annual consumption reports that can be viewed online.”

“The problems come when things are viewed politically, so the rest of the world will just think about customer data being sent to mainland China, and about privacy,” Fong said.

Ant looks set to list on stock markets in Shanghai and Hong Kong in the coming weeks, in an international public offering (IPO) of around U.S.$35 billion, the report said.

Bloomberg cited a statement from Ant Group as saying that it was unaware of any such deliberations, and that its business is primarily in China anyway, while Tencent and U.S. officials declined to comment, its report said.

Since President Donald Trump took office, the U.S. has imposed restrictions on top Chinese technology companies including TikTok and Huawei, citing security concerns.