Ant Group limits credit limits on virtual cards
Following the collapse of its IPO (IPO), China group of ants reduced borrowing limits for some of Huabei’s young users. This branch of the financial technology giant (FinTech) offers a virtual credit card.
The company said the move was aimed at promoting more “rational” consumption habits among users, Reuters reported. The company did not elaborate.
Ant Group is best known for its hugely popular payment and lending app Alipay, which has both online and mobile platforms. Chinese regulators are looking to tighten rules for FinTechs.
Ant has two credit subsidiaries, Huabei and short-term consumer loan provider Jiebei. In its IPO prospectus, Ant said those two products had been used by about 500 million people in the 12 months to June 30, Reuters said.
The canceled IPO was a big setback for Ant Group, which is now facing a global regulatory overhaul. The Chinese government’s action came after a falling out between regulators and Ali Baba billionaire Jack Ma.
Ant is the financial arm of Alibaba, which could be the biggest e-commerce company in the world.
At a meeting in November, Ma reportedly told regulators he would donate parts of Ant Group to the government. According to a Source from the Wall Street JournalMa said, “You can use any of Ant’s platforms, as long as the country needs it.”
“Any FinTech disruptor, when it becomes so large, represents a systemic risk,” he said. Ant’s highly profitable business includes granting microloans, repackaging them, and then tapping into the public market to sell those loans. Yu said this business model is reminiscent of the subprime mortgage model that plunged the world into the Great Recession more than a decade ago.