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.
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Under the draft, the PBOC plans to limit the amount an individual can pay online to 5,000 yuan ($800) per day through third-party payment accounts, unless the customer’s identity can be verified by a security token and electronic signature.
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.
China’s central bank has suggested limiting the size of transactions via third-party online payment systems like Alipay, to ensure security for consumers’ information and money.
People with limited ‘consumption accounts’ would be permitted to spend less than 100,000 yuan yearly through online third-party payment operators.
China has about 430 million online shoppers, according to official statistics, and the number is estimated to rise to 500 million for the first time this year following Beijing’s big push for internet-related business growth.
“A healthily developing industry needs regulation, while regulators are constantly becoming more open and progressive”, the company said.
Internet finance is also posing a rising threat to Chinese brick-and-mortar banks, which have lobbied for more regulations on third-party payments and peer-to-peer lending platforms. Online lenders helped fuel a stock market boom that drove the benchmark index up 152 percent in the year to June 12 before crashing.
The move would also ban users from transferring funds between bank accounts other than their own, within the same bank.
“We expect that the overall payment volume growth of (nonbank payment institutions) will slow down due to the new regulations”, the banking analysts wrote.
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Ant Financial’s MYbank and Tencent’s WeBank are among a wave of new private banks being licensed by the government to target small loans and aim to use facial-recognition software to let users set up accounts. The new rules mean that users who wish to do so would have to go through their banks, which usually charge for interbank transfers.
