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Thursday, January 21, 2021, 18:03
China to toughen supervision of non-bank payment institutions
By Xinhua
Thursday, January 21, 2021, 18:03 By Xinhua

This Sept 28, 2018 photo shows the headquarters of the People's Bank of China (PBOC) in Beijing. (PHOTO / VCG)

BEIJING - China's central bank has released a draft on regulations aimed at strengthening anti-monopoly supervision of payment services by non-bank institutions.

A draft issued by the PBOC clearly defines the scope of the relevant market and the criteria for determining market dominance, in a bid to maintain the fair order of market competition

The draft clearly defines the scope of the relevant market and the criteria for determining market dominance, in a bid to maintain the fair order of market competition.

If a non-bank payment institution meets certain conditions in terms of market share, the People's Bank of China (PBOC) can provide early warning of a range of measures, including regulatory interviews, according to the draft. It can also call for agencies to review whether the institutions have a dominant market position.

ALSO READ: PBOC urges wider acceptance of cash as payments go digital

If non-bank payment institutions fail to follow the principles of safety, efficiency, honesty and fair competition, and the healthy development of the payment service market is seriously affected, the PBOC can suggest that the State Council's anti-monopoly law-enforcement agencies stop market dominance abuse and centralization by splitting the institutions based on payment business types.

According to the draft, payment institutions are required to deposit their reserves in the PBOC or qualified commercial banks and specify the corresponding prudent oversight measures to protect the users' rights and interests.

READ MORE: PBOC reins in funds of payment platforms

The rules present the strongest and most detailed message yet of regulators’ plans to curb monopolistic practices in the online payments industry. Ubiquitous in China, Ant and Tencent have transformed how consumers shop through their mobile apps that are used by a combined 1 billion people.

Mobile payments are only part of what contribute to online transactions, but they have become the most important platform in China. Alipay, the app operated by Ant, held 55.6 percent of the mobile payments market as of the second quarter last year, according to internet consultant iResearch. Tencent had a 38.8 percent share.

Room for growth in online payments is limited after years of a head-to-head rivalry between Ant and Tencent’s Wechat Pay. Total transactions were 59.8 trillion yuan as of June 30, up 8.8 percent from a year earlier, according to iResearch. That’s sharply down from increases of 23 percent and 65 percent during the same period in 2019 and 2018, respectively.

With Bloomberg inputs

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