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China wants to restructure Alipay and get into the juicy business of credits and microloans

China wants more control of its technology. It has been taking measures that restrict the ability of its large companies to act in this area for weeks, and the last to be affected is Alipay, the payments giant owned by Ant Group.

The Chinese rulers have seen a juicy cake no longer in the rise business of credits and microloans that are made in Alipay, but in the financial data of his clients that Ant jealously guarded and that now the government of Xi Jinping wants to have within reach.

The loans would be supervised (in part) by the government

China’s regulators had already ordered the Ant Group to separate from its two large lending divisions. One of them is Huabei, which works analogously to how credit card companies do. The other is Jiebei, dedicated to microcredits.

In Beijing they now want more, and the objective is to create an independent mobile application for those loan companies in which there would also be a very relevant change: Ant would have to provide the user data that it uses to make decisions (in many cases automated) to grant or not loans.

That part of credits and loans, which until now was known as CrediTech, has already become the most important division of Ant: the revenue it monopolized in the first half of 2020 was 39% of the total. It thus outperformed the payments division (the “conventional” of Alipay, which works in a similar way to PayPal for example) and showed spectacular growth.

This is certainly a new blow in that series of reform measures that the Chinese government is carrying out against its big technology companies. If the change becomes effective, Ant will lose its ability and independence when it comes to analyzing the creditworthiness of its clients, something that until now was done in just a few seconds but that with that government participation could change significantly.

Via | Reuters