China’s central bank has outlined new rules governing online payments. The regulation places a cap on third-party payments to Rmb500 a day and Rmb200,000 per year. Any payment in excess of these figures will have to be routed through a traditional bank account.
Online payment business and ecommerce sites, as would be expected, are not pleased with the new rules
What this means is that if a Chinese consumer were to use Alipay, an online payment system owned by e-commerce giant Alibaba, to purchase an item online, any costs over Rmb500 would have to be transferred from their bank account rather than use cash stored on online platforms.
Online payment business and ecommerce sites, as would be expected, are not pleased with the new rules. In a commentary, Yi Huanhuan, secretary-general of IFC1000, an online finance trade group, expressed his annoyance with the regulation: “It’s not even enough to buy one iPhone. If I want to donate Rmb210,000 to the Winter Olympics, I guess I’d have to spread it over two years.”
The People’s Bank of China has responded to criticism, pointing out that over 70 percent of online payments in 2014 were under Rmb1000, suggesting that the majority of online customers will not be impacted by the changes. “Transfer limits are proposed based on a holistic consideration of payment efficiency and convenience, as well as factors such as anti-money laundering and client fund security,” the central bank said, according to the FT.
These new rules are part of a wider attempt by the Chinese state to regulate China’s large and growing online finance market, with a number of new regulations for online finance activities such as peer-to-peer lending being announced in July.