China’s central bank is proposing to limit the size of transactions made through third-party online payment systems in a bid to protect consumers.
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Thomson ReutersAlibaba Group’s Executive Chairman Massachusetts looks on ahead of working dinner with Russian President Putin at SPIEF 2015 in St. PetersburgBEIJING (Reuters) – China proposed new regulations on Friday that could force Internet companies such as Alibaba Group Holding Ltd, Tencent Holdings Ltd and Baidu Inc to offer their rivals’ online payment services as well as their own.
If the law is enacted, it could have a severe impact on China’s booming online third-party payments system – worth about 8 trillion yuan.
Although the PBOC and the China Banking Regulatory Commission both introduced regulations that require banks to authorize online payments through third-party services, the payment services have not complied, creating concerns about whether the newly proposed rules are enforceable, the newspaper said.
“A healthily developing industry needs regulation, while regulators are constantly becoming more open and progressive”, the company said. However, people with “comprehensive accounts” can spend about 200,000 yuan.
Under the proposal put out for public consultation over the weekend, the People’s Bank of China capped the shoppers’ spending through third-party online payment per day at between 1,000 yuan and 5,000 yuan (US$160-US$800). Users have often been able to use such payment tools to perform functions ranging from paying their electricity and online-shopping bills to investing in money-market funds and transferring money to friends and family members.
The move would also ban users from transferring funds between bank accounts other than their own, within the same bank.
The rules also state that payment services must be more stringent with ID verification at sign-up – requiring that users submit paperwork from a range of establishments such as educational institutions and police departments.
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The central bank published a document explaining each article in the draft rules later that day to address concerns expressed by people in the third-party payment sector. “The victims of this would be the hundreds of millions of users of these services”.
