PBOC halts plans by Tencent, Alibaba for virtual credit cards
Central bank 'temporarily' suspends mobile internet payment products from Tencent and Alibaba due to customer security concerns
News that the People's Bank of China had halted plans by mainland internet giants Alibaba and Tencent to offer virtual credit cards sent Tencent shares tumbling yesterday, along with those of partner China Citic Bank.
The central bank suspended the introduction of payment products based on virtual credit cards and payments made through so-called Quick Response (QR) codes offered by the two companies due to security concerns, Xinhua reported, citing a senior PBOC official.
More policies will be implemented to perfect regulation
The news came only a few days after central bank governor Zhou Xiaochuan promised the regulator would strengthen supervision of online financial products but would not ban them, marking a setback for the fast-growing e-finance business on the mainland, which has posed challenges to traditional banking.
"It's a temporary halt, rather than the rumoured 'prohibition'," Xinhua reported, citing Zhou Jinhuang, deputy director of the PBOC's payment and settlement department.
The central bank aimed to regulate such business and protect consumers' interests, instead of targeting any specific companies, he said.
Even so, shares of Citic Bank plunged 6.9 per cent in Hong Kong yesterday before trading was halted pending a clarification announcement. Tencent closed down 4.1 per cent. The Hang Seng Index fell 1 per cent.
The virtual cards, which were to be issued by Tencent and Alibaba's Alipay affiliate, together with Citic Bank, were designed to aid mobile payments amid growing online shopping demand from mainlanders.