No permits for new non-bank payment agencies
Print Edition
CHINA’S central bank said yesterday it will halt the licensing of new non-bank payment agencies in a bid to better regulate the fast-growing industry.
“No new institutions will be approved for a certain period, in principle,” the People’s Bank of China said while announcing an extension of business licenses for 27 third-party payment agencies that were already qualified.
Those agencies, including industry leader Alipay, were first authorized in 2011 and will have their services extended for another five years.
Some of them, however, will have to narrow their scope of service due to serious violations of rules or sluggish business, the PBOC said in a statement.
It vowed to guide the orderly development of the industry and prevent systemic or regional financial risks.
China’s non-bank payment sector has prospered since the early days of Alipay, a service backed by e-commerce giant Alibaba, which has eaten into the user base of traditional bank services.
There are around 270 third-party agencies with payment licenses in China, with online transactions surging 46.9 percent year on year to 11.8 trillion yuan (US$1.8 trillion) last year, according to statistics from consulting firm iResearch.
With the exception of Alipay and Tencent’s Tenpay, however, many third-party agencies have struggled to find good profit models, with some starting to explore services such as peer-to-peer lending and crowdfunding platforms.
A string of fraud cases in recent years underscored hefty risks in the sector, prompting regulators to unveil a policy last year that was partly aimed at avoiding large sums of money being deposited in third-party payment accounts.
The PBOC said yesterday that it will punish illegal practices by third-party payment agencies and revoke the licenses of those that do not offer payment services for a long time.
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