Software

Chinese authorities to take control of credit ratings of one billion Alipay users

The PRC authorities have been trying to curb the rapid growth of Ant Group’s business related to payment systems and microcredit for several months. It is now becoming clear that Jack Ma’s business restructuring will involve transferring control over the credit ratings of Alipay users, of whom there are already more than a billion people, to government agencies.

Image Source: AFP / Getty Images

Image Source: AFP / Getty Images

When Ant Group planned to go public last year, it was especially proud of the fact that decisions to issue micro-loans to clients based on the company’s database of transactions are made in seconds. The core business of Ant Group has grown at a high rate in recent years, and if in 2019 it formed 35% of the revenue of the entire holding, then in the first half of 2020 it increased its share to 39% and for the first time bypassed in turnover the payment business of Alipay itself. In addition, Ant Group accounted for 10% of all consumer loans, excluding mortgages issued in China last year.

As reported Financial Times, now the PRC authorities intend to restructure Ant Group’s business in such a way that credit institutions withdraw from it, receive shareholders from among companies with state participation, and also acquire their own specialized application for providing loans. At the same time, a joint venture with state participation created for these purposes will receive control over the credit ratings of private clients and a license of the established form. In other words, the process of making decisions on granting loans will be indirectly controlled by the Chinese authorities. The structures controlled by the latter will receive at least 50% of the shares of the joint venture, while Ant Group will retain about 35%.

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Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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