The newly established online clearinghouse, supervised by the central bank, is about to take over the place of third-party payment providers to clear half of transactions on November 11, the world's largest shopping day.
NetsUnion Clearing Corporation, the clearinghouse platform backed by the People's Bank of China, will directly channel half of the transactions on the day between third-party payment companies and banks, slashing the access of third-party payment giant.
The transactions to be cleared on November 11 are the highest volume that the clearinghouse is expected to process on a single day since it went into operation in March.
"NUCC will only process 50 percent of transactions on Nov 11, because establishing the infrastructure of clearing service takes time," said a manager in charge of the tech department of the NUCC. "The company will take over all clearing service from all third-party payment providers in the future, as required by the central bank."
The same standards and rules will apply to third-party payment providers, according to another manager from the company.
A total of 18 large banks in China have connected with the clearinghouse, and nine among 115 licensed third-party payment providers have started to channel transactions through the clearinghouse, according to the people familiar with the matter.
By the end of this year, at least 200 banks and 40 companies are expected to connect with the clearinghouse, the people said.
The amount of transactions channeled through the clearinghouse has been increasing, but the company did not disclose the exact amount.
All payment transactions handled by third-party providers, if related to bank transactions, will go through the new clearinghouse by the end of June 30 next year, according to a document by the central bank issued in August 2017.
As the first of the kind in the world, the company was built to tame online finance risks and better regulate the online payment industry increased at staggering pace.
China third-party online payment market had a total of 160 billion transactions valued near 100 trillion yuan in last year, up by around 100 percent year-on-year, according to data from the central bank.
Large amount of off-sheet online transactions concerned the government, because unlike transactions backed by banks, untraceable transactions through third-party payment providers may include potential money laundering and other illegal practices.
An all-in platform will help to curb risks through putting data transparent, according to the people.
Looking ahead, the company will also set up standards that may unify the whole market.
The company is also considering capturing part of this expanding market, promoting its own quick response code scanning to process mobile payments.
The keynote of regulation remains to be supportive of the mobile payment industry, according to an official with the central bank.
"The message is to support the expanding industry while strengthening oversight," the official said.