In a move that may hinder the booming business of the online payment industry, China’s central bank is now promoting a set of limiting regulations on the volume of transactions made via third-party online payment systems. The logic behind this move? To guarantee consumers’ information and money remain secure.
The proposal suggests to limit consumers daily transactions volume via third-party online payment to anywhere between 1,000 yuan and 5,000 yuan. This is unless the buyer’s identity can be verified by a security token and electronic signature. In addition, the proposed rule also stipulates that customers with at least five methods of verifications will be able to open an account limiting their yearly online or mobile payments to 200,000 yuan. If you have only three to five verification methods, your annual transaction cap will be 100,000 yuan.
Analysts Mao Junhua and Sarah Tian from China International Capital Corp. released a note on Monday saying, “strict client identification and transaction verification will demand more technological investments and imply more challenges for irregular players.”
With 270 online-payment firms in China (including Alibaba Group Holding Ltd.’s finance division), this proposal – which is open for public consultation until August 28th – has many in the internet finance industry enraged.
“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,” Yi Huanhuan, secretary-general of IFC1000, an online finance trade group, wrote in response to the rule draft, implying at Beijing’s victorious campaign to host the 2022 winter games.
“Basically this blocks off the industry’s space for development.”
