The House Financial Services Committee, Subcommittee on National Security, International Development and Monetary Policy will convene a hybrid hearing entitled, “Under the Radar: Alternative Payment Systems and the National Security Impacts of Their Growth.”
According to the hearing memo, alternative payment systems can operate independently of, and may never interact with, traditional financial institutions like banks. Some of these alternative payment systems have grown to become important players in the global financial system. These include systems that are owned by, or based in, countries like Russia and China. The rise of alternative payments has given way to concerns regarding national security and the ability to operate outside regulations.
The Subcommittee mentions China specifically, noting that the largest third-party payment providers based in China are Alipay and WeChat Pay, which account for 95% of mobile transactions in China. To quote the memo:
“Alipay is accepted in 110 countries and services 1.3 billion consumers; WeChat is accepted in 68 countries and services 900 million consumers. WeChat and Alipay handled 294.6 trillion yuan (US$45.6 trillion) in 827.3 billion transactions in 2020. This adoption, matched with fast payments could lead to a sharp tipping point in cross-border use: “The potential convenience of the [Chinese central bank digital currency] could extend WeChat Pay and Alipay’s reach as the digital yuan can be used to make transactions without an internet connection, through proximity reading only. This could prove to be the digital yuan’s most attractive feature, as it gives it helps digital payments act more like cash,” providing anonymity and opacity to those in the west seeking to detect or prevent financial crime.”
The witnesses testifying in front of the Committee are listed below.
- Scott Dueweke, Global Fellow, Science and Technology Innovation, the Wilson Center
- Emily Jin, Research Assistant for the Energy, Economics and Security Program, the Center for a New American Security
- Dr. Carla Norrlöf, Nonresident Senior Fellow, Economic Statecraft Initiative, GeoEconomics Center, the Atlantic Council
- Ari Redbord, Head of Legal and Government Affairs, TRM Labs
- Jonathan Levin, Co-founder and Chief Strategy Officer, Chainalysis
The hearing will be live-streamed on the Committee website tomorrow, Tuesday, September 20 at 10:00 a.m. ET