Ant Financial, the Alibaba subsidiary best known for its Alipay mobile payment service, has gotten in trouble with Chinese regulators at the People’s Bank of China. Despite what appears to be a list of several relatively severe offenses, Ant Financial was only levied a fine of 180,000 yuan ($28,525), with all the alleged breaches having been corrected since they came to light in the second half of 2017.

According to an administrative penalty noticed from the People’s Bank of China, Hangzhou branch retrieved by the China Money Network, Alipay was fined for “inadequate customer rights protection, publishing misleading advertising and improper data protection.”

Moreover, the People’s Bank of China found that Alipay did not go sufficient lengths in assuring that its customers have “sufficient information to understand and choose” their products, an allegation further compounded by misleading video advertisements and messaging on Alipay’s Weibo account. The bank also found that Alipay had faked the ratio of consumer complaints had received.

Breaches were found in consumers’ rights, product promotion, and personal information protection

Last but not least, Alipay was found not to be in compliance with rules on collection and use of customers’ financial data. This despite Alipay was reprimanded by authorities over a default setting to share users’ credit information with “corporate” partners just a few months ago.

In practice, it seems unlikely that Alipay’s apparent breaches will amount to much more than a slight PR inconvenience, not least because of the minuscule fine it received. Currently, Alipay holds 54.26 percent market share in the Chinese mobile payment market with a substantial lead over Tencent, its main rival in the payment space.

A slap on the wrist and a slight PR inconvenience is not a big problem for Alipay

The alleged breaches should also have little effect on overseas merchants and businesses that have partnered with Alipay or Alipay partners to provide Chinese customers with mobile payment options.

A more pressing potential issue in Alipay’s quest for global domination of Chinese consumer spending may be the escalating trade conflict between China and the United States. While few moves have been made to limit Alipay’s growing presence in the United States thus far, growing U.S. skepticism toward Chinese tech firms such as Huawei could pose a threat to Alipay and WeChat Pay—both products of China’s largest tech companies.

The looming Sino-US Trade war could prove more threatening than anything else for Alipay

One of the core issues that the United States has with China in terms of trade is the rampant intellectual property theft still very prevalent in the Chinese marketplace, where Alibaba’s online marketplaces are often made out to be some of the most notorious offenders. In the latest edition of the U.S. Office of the Trade Representative’s Notorious Markets blacklist, Alibaba’s Taobao was described as “engaging in or facilitating substantial piracy and counterfeiting to the detriment of U.S. creators and brand owners, as well as legitimate sellers and distributors.”

One way to punish Alibaba for its alleged facilitation of piracy and counterfeiting would certainly be to put curbs on Alipay’s rapid expansion in the United States—a move certain to be more painful for the company than a $28,525 fine levied by the People’s Bank of China.


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