Business / Industries

China tightens its grip on online payment

By Meng Jing ( Updated: 2015-08-03 14:14

China plans to tighten its regulatory control on the country's nearly 300 online-payment firms, including Alibaba Holding Ltd's finance affiliate, a move that is seen as a blow to the country's booming Internet finance sector.

Under the draft rule published on July 31, China's central bank plans to limit the amount an individual can pay online to 5,000 yuan ($805) per day through third-party payment accounts, unless the customer's identity can be verified by a security token and electronic signature. The People's Bank of China is seeking public feedback by Aug 28.

Internet finance is posing a rising threat to Chinese brick-and-mortar banks, which have lobbied for more regulations on third-party payments and peer-to-peer lending platforms.

Statistics from iResearch Consulting Group showed that China's third-party payment market jumped 50.3 percent year-on-year to 8.08 trillion yuan in the year 2014.

With mobile Internet becoming an increasingly integral part of people's lives, especially for those in China's urban areas, Internet-based payments have been adopted in an increasing number of occasions, from online shopping to more and more offline supermarkets, restaurants and cinemas.

According to the draft rules released on Friday, customers with at least five methods of verifications can open a so-called "comprehensive account", which limits annual online or mobile payments to 200,000 yuan per person. With three to five verification methods, a customer can only open a "consumption account," with an annual transaction limit of 100,000 yuan.

In an ongoing online survey conducted by, 59.6 percent of the 5,934 respondents said they believe their online shopping experience will be impacted by the new rule. And 81.7 percent of the respondents said the cap on the annual amount on online or mobile payments will impact their daily life.

Bloomberg contributed to this story.

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