Central bank sends mixed signals on online payments
Central bank sends mixed signals on payments as it seeks to tighten regulations over industry
A quiet tussle is playing out between AliPay, China's biggest online payment platform, and People's Bank of China, the mainland's central bank.
The game of tug-of-war, which enmeshes the 17 trillion yuan (HK$21 trillion) online payment industry, underlines the challenges the PBOC faces as it tries to bring order to the movement of money in Chinese cyberspace.
Nearly a year ago, state-owned card monopoly China UnionPay said online payments, like those processed by Alibaba Group's AliPay and Tencent's TenPay, should integrate with its clearing house by July this year.
But third party payment companies have not complied, at least not across the board. Several industry sources, including one AliPay employee who spoke on condition of anonymity, confirmed that the company routes transactions directly to banks, not through UnionPay.
AliPay declined to answer questions on how the company processed payments.
The regulators are facing technologies that they can't really control
This should make Alibaba a candidate for a crackdown from the central bank, one of China's most powerful political institutions. After all, "UnionPay is really the People's Bank. They are the largest shareholder", said Billy Feng, a technology analyst at CLSA Asia-Pacific Markets. But third-party payment processors have become such an integral part of online consumption that the regulator can do little more than watch the market expand.