Is Chinese WeChat A Threat To Afterpay Security?
China’s Tencent has a acquired a 5% stake in Australia’s Afterpay, marking roughly $302.2 million of investment over four months. Tencent is a leading provider of internet and e-commerce platforms in China, including Weixin, WeChat, QQ and Weixin Pay, a leading mobile payments platform in China that services more than 1 billion commercial transactions every day.
“We are pleased to become investors in Afterpay. Inside China we operate the leading digital payment service and a rapidly growing FinTech platform, and outside China we have actively invested in pioneering FinTech companies, providing us with unique insight into emerging FinTech services,” said James Mitchell, Chief Strategy Officer of Tencent.
Afterpay has said it is this experience that makes the new partnership between the two companies valuable, as the Australian-born company eyes expansion in the Asian region.
“Tencent’s investment provides us with the opportunity to learn from one of the world’s most successful digital platform businesses,” Anthony Eisen and Nick Molnar, the Co-founders of Afterpay, said. “To be able to tap into Tencent’s vast experience and network is valuable, as is the potential to collaborate in areas such as technology, geographic expansion and future payment options on the Afterpay platform.”
However, some are concerned about what Tencent’s problematic privacy and data protection practices could mean for Afterpay. For instance, WeChat has been widely accepted to be subject to both “censorship and surveillance”, with Amnesty International finding it did not provide end-to-end encryption. The AFR reported that Tencent responded by saying such privacy measures are “legally and politically very difficult” under China’s regulations.
The Afterpay-Tencent announcement comes tensions between the Chinese and Australian government’s have been forming over the Morrison administration’s calls for a global inquiry into the source of the COVID-19 outbreak. Last week China’s Ambassador Jingye Cheng alluded to potential trade repercussions in response.
“We look forward to a deep and long-term business partnership between Tencent and Afterpay,” Mitchell said.
In recent times Tencent has made a number of other investments in international payment platforms. For instance, it led a $45 billion Series B funding round in French mobile payment app Lydia as well as Melbourne-based Airwallex’s $13 million Series A funding round.