China's central bank mulls internet payment curbs
19 March 2014
The People’s Bank of China (PBOC) has recently issued two sets of draft rules for consultation: guidelines on the development of payment services via smartphones, and administrative measures for internet payment services provided by payment companies.
This followed the decision of PBOC on 14 March which suspends internet payments made by scanning offline QR codes with mobile devices via Alipay and Tenpay, as well as the planned rollout of virtual credit cards by the two payment companies.
Sources who have read the draft rules said that under the proposal, a user can only transfer up to Rmb1,000 to a third-party payment company's account at a time, and the combined total cannot exceed Rmb10,000 a year. It also caps single purchases using third-party payment accounts at Rmb5,000, with a monthly limit of Rmb10,000. Users who need to make transactions above the limit should do so through their bank accounts.
Redemption of Yu’E Bao and the like may change
Banking sources said that means the central bank will impose restrictions on third-party payment agencies. When the new policy comes out after consultation is completed, it will likely curb the rapid development of payment companies in favour of banks and other traditional financial institutions.
Many users of Yu’E Bao (a deposit-like online money market fund run by Alibaba) have asked if money can be transferred out of the fund under the new regulations in case their funds with Yu’E Bao exceed Rmb10,000. An analyst with a research centre for third-party funds in Shanghai said that investors need not worry. Funds with Yu’E Bao are actually currency funds which do not have restrictions on the amount for subscription and redemption through the banking channels. Therefore, even if the central bank is to issue new regulations that will indeed have an impact on Yu’E Bao, it is believed that the latter would make proper arrangements with the corresponding fund companies, such as allowing investors to redeem through the banking channels.
Some analysts believe that the suspension of payment services via virtual credit cards and QR codes is due to security concerns, and to further improve oversight of internet finance. Currently, both China CITIC Bank and Alibaba said they are communicating further with the central bank on this aspect. After submitting the supplementary materials and making appropriate amendments, they reckon the possibility of subsequent resumption of code scanning payment services and virtual credit card business cannot be ruled out.
- Banking Services
- Mainland China
- Mainland China