China’s central bank fines four companies 100 million yuan for violating payment service rules
The People’s Bank of China has slapped penalties on four payment service platforms for breaching service regulations, in a move to step up regulatory oversight of the country’s multi-trillion-dollar mobile payment market.
The four companies were fined a combined 100 million yuan (US$14.65 million) by the Shanghai branch of the Chinese central bank, according to a statement.
Alipay, the payment service operated by Alibaba Group Holdings’ Ant Financial Services unit, was fined 4.12 million yuan, while three other service providers paid the balance of the penalty. Alibaba owns the South China Morning Post.
The statement did not give details on what specific rules Alipay had violated. The amount of the fine levied on Alipay was the smallest among the four.
Alipay said that the fine was due to “certain irregularities” related to its payment services in the Chinese mainland.
“Alipay started to correct those irregularities immediately after they were identified and most of the corrective measures have already been completed and recognised by the regulators. Compliance is our top priority and we maintain robust compliance policy and procedures that cover all aspects of our businesses,” an Alipay spokesperson said.
Among the others, Union Mobile Financial Technology was fined 26.4 million yuan and Gopay was fined 46.4 million yuan.
The PBOC has been conducting a thorough inspection into online payment firms nationwide since late 2017 to help ward off risks and clean up the fast-growing sector, two sources close to the PBOC told the South China Morning Post.
Ant Financial is an affiliate of China’s e-commerce giant Alibaba Group which owns the Post.
The central bank has issued about 270 licenses to mobile payment providers amid rapid growth in cashless payment systems across the mainland.
The sources said that a number of licenses could be revoked as part of a clean-up campaign by the central bank designed to better regulate the market.
China, seen as a nation moving toward a cashless society, recorded mobile payment transactions of 81 trillion yuan from January to October last year, according to the Ministry of Industry and Information Technology.
Alipay and Tencent’s WeChat Pay dominate the mainland’s mobile payment sector, with the two accounting for more than 80 per cent of the market.
“The central bank’s inspections will prompt all players to focus on compliance since the regulatory requirements must be met,” said Ding Haifeng, a consultant with Integrity Financial Consulting. “It seems that 270 licenses is a big number, and it can be reduced by kicking out some small companies.”