The online payment industry in China will become more regulated, with the central bank ordering third-party payment institutions to connect to a newly established unified platform by June 30 in 2018.
Unified platform refers to an online payment clearing platform for non-banking payment institutions.
At present, online payments made via third-party payment tools such as Alibaba's Alipay and Tencent's WeChat Pay are completed directly between such providers and banks, bypassing the clearing system of the People's Bank of China (PBOC), the central bank.
This situation has caused some risks for the industry. The PBOC can't supervise illegal activities such as money laundering and illicit money transfers that are conducted through online payments via the third-party payment tools, Wang Pengbo, a finance industry analyst from Internet research firm Analysys, told the Global Times on Monday.
Also, the leading third-party payment companies leverage their strong financial position to bargain with the banks for lower service fees and other preferential policies. That's unfair to small third-party payment providers, noted Wang.
As China's third-party payment market is huge, it requires additional regulation, noted experts. Transactions involving third-party online payments rose 56.1 percent in the first quarter of 2017 year-on-year to 6.4 trillion yuan (.95 trillion), according to a report iResearch released in July.
The platform will enable the PBC to better supervise capital flows via the third-party payment companies, which will help the industry over the long term, Huang Yue, an analyst from Internet service consultancy iResearch, told the Global Times on Monday.
Huang noted that data collected by the platform will create more opportunities for profit.
Consumers won't notice any difference when they make payments in this way, said Wang.
The platform is being jointly founded by 45 shareholders with registered capital of about 2 billion yuan, Caijing magazine reported on Saturday.