Beijing urges WeChat to reduce its dominance in mobile payments amidst digital yuan pilot
China’s regulators have requested that Tencent Holdings, the parent company of WeChat, reduce the mobile payment market share of the app. This request is believed to primarily target in-person payments made through QR codes. While the specific targets for market share reduction have not been disclosed, a source close to the company stated that WeChat is cautious about the risks of becoming too dominant. Currently, WeChat Pay and Alipay, owned by Ant Group, dominate China’s mobile payment ecosystem. The reason behind this regulatory pressure is unclear, but it aligns with Beijing’s efforts to promote the adoption of the digital yuan. However, the digital yuan has faced challenges in gaining widespread acceptance due to concerns over interest rates and limited usability. This request to reduce market share comes shortly after the digital yuan was launched in Hong Kong, signaling China’s intention to expand its use beyond the mainland. China’s mobile payment market is highly lucrative, with over 92 trillion yuan ($12 trillion) in transactions in Q1, including 15.59 trillion yuan from QR code transactions. The directive to Tencent is part of a broader effort to prevent private tech giants from overshadowing the state-backed digital currency. By limiting WeChat Pay’s market share, Beijing aims to create more space for the digital yuan to grow and become integrated into the daily financial activities of its citizens.
