China's Ministry of Transport is encouraging bike-sharing companies to adopt a deposit-free business model or keep their user deposits in a regulated bank account, according to ministry guidelines issued Monday.
Bike-sharing companies that require deposits or other up-front payments should open a specific bank account to hold these funds, the ministry said. The accounts must be regulated to avoid capital risk.
The ministry also required bike-sharing companies to improve their deposit systems so users can get their money back immediately upon request.
"Theoretically speaking, the bike-sharing companies infringe upon their users' rights when they hold on to deposits after users have asked for their money back," Li Junhui, professor at China University of Political Science and Law, was quoted as saying on Monday by CCTV.com.
The whereabouts of large amounts of deposits and up-front payments has aroused suspicion and concern among bicycle users and related parties since the birth of bike-sharing industry.
Most people worry about the potential purpose of bike-sharing companies to put the money into the financial market, according to earlier media reports.
The guidelines stipulate that bike-sharing companies should adopt a real-name registration system and sign a service contract with their users that clearly explains the terms of service.
The guidelines also prohibited the companies from renting bikes to children under 12 years old and required the companies to insure their users.