China’s central bank has proposed a daily cap of 5,000 yuan ($817) on transactions through third-party online payment systems, in an initiative to raise security protocols.
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Theoretically, consumers would be provided with the ability to opt for payment options from other sites, such as social networking and online entertainment firm Tencent or search firm Baidu, while shopping on an Alibaba platform.
The Alipay online-payment platform has more than 400 million annual active users.
The public consultation closes on 28 August.
“A healthily developing industry needs regulation, while regulators are constantly becoming more open and progressive”, the company said.
Although the PBOC and the China Banking Regulatory Commission both introduced regulations that require banks to authorize online payments through third-party services, the payment services have not complied, creating concerns about whether the newly proposed rules are enforceable, the newspaper said. However, people with “comprehensive accounts” can spend about 200,000 yuan.
Such payment services have surged in popularity in China, fueled by the proliferation of smartphones and the expansion of mobile-data coverage.
The rules state that daily transaction limits will be set at 5,000 yuan ($US806) a day or 1,000 yuan a day, depending on the digital-security features provided by the platform.
Online payment providers who implement the use of signatures or digital certificates in their transactions will not be affected by the regulation.
The new rules are to put an end to the “unfair advantage” of Internet companies in competing with banks, as they have been benefiting from the absence of regulation for capital, liquidity and provision requirements, Sinolink Securities Co (國金證券) Shanghai-based analyst Ma Kunpeng said in a note on Saturday.
“The implementers of these rules are looking at this from the perspective of protecting the banks”, said Mr Yu, who wrote a book on Internet finance in China published previous year.
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The draft rules also ban payment services from conducting deposits, withdrawals, loans, guarantees and foreign exchange, since these are all banking operations that require government approval, the newspaper said.
