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China economy

Chinese mobile payment giants Alipay, Tenpay fined US$88,000 for breaking foreign exchange rules

Pair named among 27 companies and individuals charged with violations by State Administration of Foreign Exchange

PUBLISHED : Wednesday, 25 July, 2018, 8:33pm
UPDATED : Wednesday, 25 July, 2018, 9:47pm

China’s two biggest mobile payment providers have been named among 27 companies and individuals found guilty of breaking the rules on foreign exchange transactions.

Alipay, the payment arm of Alibaba Group – which also owns the South China Morning Post – and Tenpay, owned by tech giant Tencent Holdings, were each fined 600,000 yuan (US$88,000) by the State Administration of Foreign Exchange (SAFE), the regulator said in a statement on Tuesday.

Alipay was found guilty of “conducting cross-border payment services out of its approved scope” and “misreporting international payments” between January 2014 and May 2016, it said.

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Tenpay, meanwhile, was charged with “providing cross-border payment services for non-Chinese residents without going through the due registration process” between January 2015 and June 2017.

The public pronouncement of the companies’ guilt was the first of its kind by the regulatory body, and comes as the pair are seeking to expand into overseas markets.

Meanwhile, Beijing is trying to prevent money flowing out of the country. The value of China’s currency, the yuan, has been falling against the US dollar as a trade dispute between the world’s two largest economies has worsened.

A cap of 100,000 yuan on how much Chinese citizens can withdraw per year from overseas banks was introduced on January 1, and since September, it has been a requirement for Alipay and Tenpay to report all overseas payments of more than 1,000 yuan made through their platforms.

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Despite the government’s efforts, demand for foreign currencies among individuals and companies fell last month, according to figures from SAFE. And with the outward flow of money expected to accelerate in the months ahead – as the US raises interest rates – Beijing is bound to react, analysts said.

“China will enhance its capital controls in the second half of the year,” Ting Lu, chief China economist at Nomura International in Hong Kong, said.

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As well as the two mobile payment companies, 13 commercial banks, including branches of Industrial and Commercial Bank of China, Bank of China and Bank of Communications, were fined by the foreign exchange regulator, the statement said.

At the individual level, a man from north China’s Hebei province was punished for transferring US$2.45 million out of the country to overseas bank accounts in 2016. The amount represented more than 50 times the annual personal transfer limit and he achieved the fraud by illegally using the identities of 54 people associates.