* Rules to protect data of clients who use third-party platforms
* Online payment limits based on user's financial condition
* New ID verification requirements for online transfers
* Rules not as strict as local media earlier reported
By Lu Jianxin and Gabriel Wildau
SHANGHAI, April 18 (Reuters) - China will limit the amount of money consumers can transfer to third-party online payment platforms, aiming to protect banks and consumers from fraud amid an explosion of online and mobile payment transactions.
Banks will be obliged to limit how much money an individual can transfer to platforms such as Alibaba Group Holding's Alipay per transaction or on a single day, based on the person's financial status, showed a document issued by the central bank and banking regulator.
Lenders such as the Industrial and Commercial Bank of China Ltd already limit transfers to Alipay to 50,000 yuan ($8,000) per month, in part to slow deposits leaving for high-yielding money-market funds such as Alibaba's Yu'e Bao.
But by June 30, all banks must be prepared to implement transaction limits and also establish a means of verifying consumers' identities when they link their accounts at third-party payment platforms to their bank accounts.
"The requirements governing the establishment of business relations between commercial banks and third-party payment institutions are aimed at strengthening management of such business," the regulators said in the document.
"They are also put forward to protect the safety of commercial bank clients' information, funds and bank accounts and maintain the clients' legitimate rights."
The document from the People's Bank of China (PBOC) and China Banking Regulatory Commission (CBRC), dated April 3, was reported by the official Shanghai Securities News on Friday and published in full on the website of China Business News.
It comes at a time absent of any obvious increase in online fraud, and the rules do not contain more draconian measures that local media reported were under consideration, such as limiting individual transfers to 5,000 yuan or a monthly total of 10,000 yuan.
China is set to overtake the United States as the world's largest online retail economy this year, according to consultancy McKinsey, after online and mobile payments rose 47 percent last year to 5.37 trillion yuan ($863.48 billion), showed data from Beijing-based consultancy iResearch.
The surge has fuelled a clash between banks and internet companies who are pushing into financial services such as online payments and wealth management products.
Funds under Alibaba's Yu'e Bao nearly tripled to 541 billion yuan over the three months ended March, according to a quarterly earnings report released late on Thursday by Tianhong Asset Management Co, an Alibaba affiliate which manages Yu'e Bao funds.
Alibaba rivals Tencent Holdings Ltd and Baidu Inc offer similar money-market funds and payment services. This week, Baidu launched a new mobile wallet application.
Reuters previously reported that the China Banking Association was lobbying for restrictions on online financial products that would reduce the outflow of traditional bank deposits into wealth management products linked to third-party payment platforms.
Among other measures announced in the authorities' document, banks will have to set up virtual private networks (VPNs), firewalls and other dedicated channels to prevent the third parties from accessing the banks' internal data.
Banks must also analyse clients' ability to sustain risk before letting them make payments through third parties, and conduct real-time supervision of clients' third-party payment activity.
"Commercial banks must include their third-party payment business in overall risk control mechanisms," the central bank and regulator said in the document.
$1 = 6.2190 Chinese Yuan Editing by Christopher Cushing