In China, mobile apps like AliPay and WeChat are the dominant companies in the popular social media-based payment platforms. Currently, AliPay has about 52% of the market, while WeChat Pay picks up about 44% of the remaining market. These payment options are widely used and accepted throughout China, allowing users to keep funds stored in their respective accounts, and used their mobile devices to make payments with merchants, vending machines and peer-to-peer transactions. WeChat payments are backed by its parent company, Tencent, which happens to be the world’s largest investment corporation, as well as the world’s largest gaming and social media company.
Both being Chinese companies, they must adhere to the stringent set of rules imposed by the Chinese government. It’s no secret that China has maintained a less-than-supportive view on cryptocurrencies (digital currencies), and has been a leader in creating FUD-worthy news regarding Bitcoin and other digital currencies and ICO projects. In 2017, China imposed a blanket ban on the use of digital currencies for use in commerce, however the (often) decentralized and semi-anonymous nature of digital currencies has made it possible for investors to continue purchasing and using these currencies, despite the government’s attempts at prohibition. As China has a censored/regulated ‘internet’, users are barred from accessing top digital currency exchanges, like Binance, Bitfinex and Huobi.
Recently, Tencent alerted Chinese authorities (China Insurance Regulatory Commision and Central Network Information Office) that some of its accounts were indeed being used to access these banned digital currency-based outlets; the identified accounts were ultimately shut down. Tencent announced Friday that they would now prohibit any user from using WeChat for any digital currency transaction collection, limit payment amounts for seller accounts, and can now directly intercept any transaction (in real-time) being sent to a banned entity. Similarly, AliPay announced:
“Always, Alipay will resolutely retreat for merchants involved in virtual currency transactions; for personal accounts suspected of virtual currency transactions, according to the circumstances, resolutely take restrictions on account collection functions or even permanently limit collections and other measures .”
Both companies have also set up “risk prevention” programs meant to inform their users of the risks involved with investing in digital currencies and ICOs. Tencent expressed their intentions:
“Tencent once again appeal(s) to users to recognize the risks of ICO and “virtual currency” trading platforms at home and abroad, firmly establish awareness of risk prevention, actively cooperate with special rectification work, and jointly safeguard financial order and social stability.”
What we see here, again, is China doing its best to stifle a market that really cannot be. Even with the reach and power of such a massive and influential body, we will see, again, that Bitcoin and many other digital currencies cannot be stifled. China flexing its muscles to prohibit such a large, decentralized and globally viable new market will only show the even greater strength of the latter. So, while the announcements by these 2 major companies may seem disheartening, the inevitable failure of their ability to completely prevent the use of digital currencies in China will ultimately prove the resilience, strength and accessibility of digital currencies themselves.