The People’s Bank of China (PBoC) has defended its new draft rules that force online payment processors to direct large payments through traditional bank accounts.
In July PBoC set out new guidelines that stifle online payment start-ups. The new framework covers everything within the internet finance industry, including payments, wealth management, peer-to-peer lending and crowdfunding.
Third-party online payment processors have now been set a daily RMB5000 ($805) processing limit per client, a move that has sparked outrage within the online payment community.
‘‘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,’’ complained Yi Huanhuan, secretary-general of IFC1000, an online finance trade group.
‘‘Basically this blocks off the industry’s space for development,’’ continued Huanhuan.
The regulation changes have been designed to strike a balance between start-up payment firms attempting to disrupt traditional banks, while also trying to tighten banking regulation and improve online security.
Online payments in China are expected to hit Rmb11.8tn ($1.9tn) this year, which is up from Rmb8.1tn in 2014, according to research. The online payment sector in China is currently dominated by Alipay, the payments arm of e-commerce giant Alibaba.
The Central bank responded to the widespread criticism, defending its position by claiming that Chinese consumers who made online payments in 2014 spent less than RMB100 a day.
The PBoC also stated that third-party payment companies could process more than RMB5000 a day, but would have to transfer the excess amount directly from a bank account linked to the user’s payment platform account.
‘‘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,’’ said a Central Bank statement.
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