Fintech

China Tightens Rules for Non-Bank Payment Firms Like Alipay

 

China has announced tough rules for non-banking payment institutions amid an ongoing clampdown on the country’s $57 trillion financial sector.

China’s State Council, led by Premier Li Qiang, published rules for the supervision and management of non-banking payment institutions that include platforms like Alibaba’s Alipay and Tencent’s WeChat Pay.
The rules, published on Sunday, will come into force on May 1.

Among other measures, the rules implement tougher licensing regulations and call for stronger risk management of non-bank payment platforms.

 

Also on AF: China Drafts Contingency Plan for Data Security Incidents

 

The measures aim to prevent misappropriation of funds and other criminal activities, People’s Bank of China, the country’s central bank, and the Ministry of Justice said in a joint statement on Sunday.

State media Xinhua reported the regulations were aimed at facilitating “the sound and healthy development” of the industry.

The rules also require institutions to strengthen the protection of user information and payment accounts.

They require non-banking payment institutions to “guard against illicit fundraising, telecom fraud, money laundering, gambling and other criminal activities,” Xinhua said.

Firms must clearly mark prices for their services and charge “reasonable” fees the rules say. They also raise “the degree of punishment for serious violations”.

 

Linked to earlier tech crackdown

The joint statement also said that in cases of violations of the rules the central bank would impose “fines, restrictions on some payment operations, or order them to suspend business for rectification, up to the revocation of their payment business licenses.”

The rules come at a time when the financial sector has come under Beijing’s lens, amid a push by President Xi Jinping to eliminate national security risks from major industries.

Alipay and WeChat Pay are the most popular non-banking payment platforms in the country, with other tech firms including JD and Huawei launching their own digital payment options.

State-owned China Telecom also has its own digital payment platform known as Bestpay.

Beijing has stepped-up its scrutiny of non-banking payment platforms since 2021 when it began a wider crackdown on the financial activities of Chinese technology giants.

The tech crackdown stemmed, in part, from growing concern in Beijing over the risk of financial contagion resulting from tech firms’ empire building.

This heightened scrutiny led to the dramatic collapse of fintech giant Ant’s $37 billion IPO in November. The regulatory scrutiny of Ant only ended this year in July, with a $1.1 billion fine on the Jack Ma-founded group.

 

  • Reuters, with additional inputs from Vishakha Saxena

 

Also read:

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China Bank Tells Staff: Avoid Bad News and Luxury Goods

China Set to Tighten Hold on Crackdown-Hit Finance Sector

Top China Dealmaker Bao Fan Disappears, Bank Stock Plunges

China Bankers to Shun ‘High-End Taste’ Fearing Regulatory Ire

China Vows Anti-Corruption Crackdown on Financial Sector

Ant IPO Unlikely in the Short Term, Chinese State Media Says

China Allows Ant Group to Release Finance AI Products to Public

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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