ByteDance, the Chinese parent company of TikTok, has announced its intention to secure a European money licence in Luxembourg.
According to The Information, ByteDance is making a renewed effort to secure a payments licence in Europe through Luxembourg after an unsuccessful attempt in Ireland earlier this year.
ByteDance abandoned its Irish payments licence application after regulators found discrepancies regarding its bank accounts, which were closed by HSBC due to concerns about insufficient safeguards against money laundering and terrorism financing.
Luxembourg mirrors Ireland in many ways as an appealing choice for ByteDance’s renewed quest for a European payments licence. The country offers a business-friendly environment with low corporate tax rates, streamlined regulatory processes and a stable economic climate.
Recently, TikTok has been urging more creators to livestream and sell products directly. To support this, the company has been developing its own payment system, though it has encountered some challenges along the way – as mentioned above.
By taking control of its payment systems, ByteDance aims to streamline operations, reduce third-party costs, and better manage risks, paving the way for potential US and European expansions. Currently, TikTok depends on services like Stripe, Adyen, PayPal and Worldpay in areas where it lacks a payment licence, according to company disclosures and former employees.
Having grown rapidly in recent years, TikTok now faces increasing scrutiny, with some countries, including the US, considering banning the app. In response to these challenges, ByteDance has launched a new payments division, PIPO Luxembourg, signalling its dedication to expanding in Europe amid potential US restrictions.
Recently, there has been a growing trend of social media platforms aiming to evolve into “everything” apps. This was highlighted by Elon Musk’s ‘X’, which announced plans to introduce payment features earlier this month.
This is also not the first time that TikTok has pursued its ambitions in the payments space. Last year, a spokesperson for the social media app told Reuters that it was engaged in talks with the Indonesian central bank for a payments licence, though it is unclear how these talks progressed one year on.
