Beijing asks WeChat to lower its mobile payment share amid digital yuan pilot

China’s
regulators
have
asked
Tencent
Holdings
to
lower
the
mobile
payment
market
share
of
WeChat
just
a
few
weeks
after
Beijing
started
the
digital
yuan
pilot
in
Hong
Kong.

Tencent
Holdings
is
reportedly
under
pressure
from
Chinese
regulators
as
Beijing
is
asking
the
tech
giant
to
reduce
the
mobile
payment
market
share
of
its

WeChat
app,
Nikkei

reports,
citing
three
sources
familiar
with
the
matter.
The
request
is
understood
to
primarily
target
the
market
share
for
in-person
payments
made
via
QR
codes
rather
than
online
shopping.

Although
the
precise
numerical
targets
for
WeChat
Pay’s
market
share
reduction
remain
unspecified,
a
person
close
to
the
company
told
Nikkei
that
“WeChat
is
not
targeting
user
expansion
and
is
very
cautious
about
the
potential
risks
of
growing
too
big.”

China’s
mobile
payment
ecosystem
is
currently
dominated
by
WeChat
Pay
and
Ant
Group’s
Alipay,
despite
the
presence
of
approximately
185
non-bank
payment
institutions.
While
the
exact
reason
behind
the
latest
move
remains
unclear,
regulatory
pressure
coincides
with
Beijing’s
efforts
to
promote
the
adoption
of
its
state-backed
digital
currency,
the

digital
yuan,
also
known
as
e-CNY.

Since
its
pilot
launch
in
2020,
the
digital
yuan
has
struggled
to
gain
significant
traction,
with
some
officials

preferring
not
to
keep
their
money
in
e-CNY
due
to
concerns
over
the
absence
of
interest
and
limited
usability

“I
prefer
not
to
keep
the
money
in
the
e-CNY
app,
because
there’s
no
interest
if
I
leave
it
there.”

Sammy
Lin,
an
account
manager
at
a
state-owned
bank
in
Suzhou

The
latest
move
also
comes
less
than
two
weeks
after
China

started
its
first
pilot
outside
the
mainland,
with digital
yuan now
available
in Hong
Kong.
According
to
the
Hong
Kong
Monetary
Authority,
the
local
residents
can
top
up
digital
wallets
with
up
to
10,000
CNY
(approximately
$1,385)
via
17
retail
banks
in
Hong
Kong,
though
barred
from
conducting
peer-to-peer
transactions.

As
Nikkei
notes,
China’s
mobile
payment
market
is
highly
lucrative.
The
total
mobile
transactions
through
third-party
service
providers
surpassed
the
92
trillion
yuan
($12
trillion)
mark
in
Q1,
including
15.59
trillion
yuan
from
QR
code
transactions,
as
per
data
from
consultancy
firm
Analysys.

The
Chinese
government’s
directive
to
Tencent
appears
to
be
part
of

broader
efforts
to
ensure
that
private
tech
giants
don’t
overshadow
the
state-backed
digital
currency.
By
curbing
WeChat
Pay’s
market
share,
Beijing
might
be
traying
to
create
more
room
for
the
digital
yuan
to
grow
and
integrate
into
the
daily
financial
lives
of
its
citizens.