BEIJING, March 18 China's central bank is
considering regulations that would significantly limit the size
of payments made using the payment platforms of Chinese internet
firms including Alibaba Holding Group and Tencent
The People's Bank of China (PBOC) released draft rules last
week to major banks for consultation, state media reported on
Monday. These would restrict single purchases through non-state
online payment services to 5,000 yuan ($810), with a monthly
limit of 10,000 yuan.
They would also ban the internet companies from handling
offline transactions, currently in the purview of a
government-controlled monopoly, and limit transfers from bank
accounts to accounts managed by the companies.
China's online and mobile payment transactions have been
growing at a frenetic pace. The online payment market last year
increased by 47 percent to 5.37 trillion yuan ($869.20
billion)in transactions, according to Beijing-based consultancy
That has fuelled a clash between the financial sector and
internet companies as online firms push into banking and ramp up
their own financial services, offering online payment options
and wealth management products.
Some analysts believe the proposed restrictions would
cripple the online payment businesses of internet firms.
However, Wang Dengfeng, a manager at Alibaba affiliate
Tianhong Asset Management Co, played down the proposals.
"This series of regulations is in no way a stranglehold,
they're a form of standardisation," he told journalists in
Beijing on Tuesday.
Tianhong also dismissed reports that the proposed rules were
the result of lobbying by entrenched interests in China's state
"We don't see this as an inter-organisational conflict of
interest, or about 'who is stealing whose milk'," added Zhou
Xiaoming, Tianhong's vice general manager.
Alibaba said on Sunday it had picked the United States for a
long-awaited initial public offering, ending months of
speculation about where it would float and dealing a blow to the
Hong Kong stock exchange.
NOT OFFICIAL YET
Alibaba's payment affiliate put out a statement addressing
the draft regulations on Monday. "We have reported our opinions
to, and are in close communication with, the PBOC," said an
official with Alipay. "Given that the document is now under
consultation, we are not able to comment further."
On Tuesday, Tencent released a statement from Tenpay, its
payment affiliate which also runs wealth management investment
"These draft (regulations), which are in the phase of
soliciting public opinion, have not been officially put into
effect yet," it said. "Tenpay has already sent its feedback to
the PBOC and will keep actively communicating with the PBOC."
The statement added that Licaitong investments would not be
affected by the regulations, because they are purchased with a
bank card and not through a third-party payment system.
A central banker who helped draft the new proposals told
Caixin Media that the new rules were intended to limit the
operating scope of third-party payment companies to online
shopping, while prohibiting offline payments.
In February, Alipay said it handled 900 billion yuan in
mobile payment transactions from more than 100 million users
last year, completing more mobile payments than U.S.-based
PayPal and Square Inc combined.
Alibaba and Tencent both said recently they would launch
virtual credit cards that use QR codes, similar in function to a
bar code, scanned by smartphones to process payments, in
partnership with China CITIC Bank Corp .
But last week, the central bank suspended the use of this
type of payment by mobile devices, halting the rollout.
The draft rules would restrict one-time money transfers
through individual third-party payment accounts to 1,000 yuan,
with a cap on the cumulative annual transfer of 10,000 yuan.