Jack’s Fascinating New Startup Scares The System

It handled more payments last year than most visas, controls the world’s largest market fund and to tens of millions of people. Its online payments platform completed more than $8 trillion of transactions last year—the equivalent of more than twice Germany’s gross domestic product.

Ant Financial Services Group, founded by Chinese billionaire Jack, has become the world’s biggest fintechnology firm, driving innovations that let people use their phones for buying insurance as easily as groceries, enabling millions to go weeks at a time without using physical cash.

That success is also putting a target on the company’s back.

China’s complain Ant siphons away their deposits, causing them to pay higher interest rates, and is a factor leading them to close branches and ATMs. One commentator at a state-owned television channel described Ant’s huge money-market fund as “a vampire sucking blood from banks.”

 

 

Chinese authorities, clearly increasly uncomfortable about Ant’s scale, have started to put limits on the activities it can pursue. Earlier this year, The central bank undermined a years-long effort by Ant to build a national credit-scoring system. The bank effectively prevented Ant’s system from being used by institutions making loans.

Regulators have issued rules requiring large money-market funds to sharply reduce holdings of assets that allow them to pay high interest rates. They have pressured Ant to slow inflows into its giant money fund.

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