The overhaul is expected to require a new license for the mobile payments service. Credit: Steve Buissinne from Pixabay.

Chinese authorities are looking to overhaul the payments arm of Tencent Holding, a technology and entertainment conglomerate, reported Bloomberg News.

As part of the overhaul, the regulators are assessing whether to include mobile payment and digital wallet service, WeChat Pay, in the firm’s newly created financial holding company.

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The potential move is expected to pose hurdle for Tencent, which was ordered last year by Chinese regulators to merge its securities, banking, insurance and credit-scoring services into a financial holding company to better supervise it.

The overhaul, however, could require a new licence for the mobile payments service, the publication reported citing people familiar with the matter.

The mechanics are also due to be resolved for the new financial business, while arrangements could be changed, according to the people.

Furthermore, the Tencent’s new financial holding company would require additional capital investment and have tighter regulatory scrutiny.

As per the regulators, Tencent’s current payments licence that is owned by its TenPay unit would not be sufficient to cover the services of WeChat Pay, the sources added.

TenPay unit is the back-end provider of wallet services on WeChat and QQ.

Last week, The Wall Street Journal reported that a fine is being imposed on Tencent after Chinese authorities found non-compliance to some central bank regulations on its WeChat Pay mobile network.

In the same week, Reuters reported that Tencent and Alibaba Group Holding were planning to axe tens of thousands of jobs in 2022 to cope with the country’s regulatory crackdown.

In April 2021, Tencent and several other firms including Meituan and ByteDance were summoned by the Chinese regulators requiring them to restructure their financial arms into holding companies.

The move was intended to cut “improper links” between the respective firm’s existing payments services and financial products.