BEIJING — China’s central bank released detailed regulations of online payment services by non-bank institutions on Dec 28 in the latest effort to contain possible risks in the booming Internet finance industry.
The new rules require real-name registration for all non-bank payment accounts and classifies them into three categories depending on the security levels. The size of payments allowed through such accounts will then range from 1,000 yuan ($155) to 200,000 yuan per year.
Transactions through banking payment platforms would not be restricted by the regulation, the central bank said.
The aim of the policy is partly to avoid large sums of money being deposited in third-party payment accounts, which are beyond the protection of bank deposit insurance and will leave consumers vulnerable to possible risks.
Since the creation of Alibaba’s Alipay, China’s third-party payment industry has expanded rapidly. In the first three quarters of 2015, payment institutions’ online transaction volume totalled 32.97 trillion yuan, surging 98.8 percent year-on-year.
With the exception of Alipay and Tencent’s Tenpay, who have made good money selling wealth management products, most third-party agencies have struggled to find good profit models, with some starting to explore services such as parking money for commodity trading, peer-to-peer lending and crowdfunding platforms.
But a string of fraud cases in recent years underscored hefty risks in the sector.
In addition to limiting the size of transactions, the new regulation also bans payment institutions from opening accounts for firms engaged in financial businesses.
The new policy will be effective from July 1, 2016.