A New Era for Online Payments in China

by Ronald Chua, iPS, 29 July 2010

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topics:
Financial Services

tags:
Alipay domestic consumption e-commerce iPS Tenpay third party payment services

Small Not Beautiful

The high barriers for approval are possibly too high for many of China’s smaller payment providers, which may end up losing their investments in the industry as well as any user credits they have stored within their systems. The biggest payment providers in the market, Alipay and Tenpay, may also have been put on the back foot. While they meet all the current requirements for PBoC approval, they have a significant amount of foreign investment and the current approval regulations do not apply to foreign funded companies.

According to the PBoC, “the business scope for foreign companies, the requirements for foreign investors in such businesses and the investment ratios for foreigners will be stipulated separately and reported to the State Council for approval.” Song Fei Xu, a Professor of Economics at Peking University, believes that the rules for foreign-funded companies will be stricter than those for local ones.

The new regulations will almost certainly improve China’s payment industry by giving it the security and monitoring it needs to become trusted by consumers and businesses alike. There will surely be short-term disruptions, particularly among the smaller providers. But as Celina Luan, General Manager of iPS, puts it: “The new policies will promote the healthy development of the industry, enhance the professional image of online payment providers and change the industry’s image for the better.”

About the Author

Ronald Chua is Assistant General Manager at iPS, a pioneer in China’s third-party payment industry. It provides an online payment platform and payment solutions to e-commerce merchants and other companies, and has formed partnerships with 30 Chinese banks and international credit card organisations, including Visa, MasterCard, JCB, American Express, Diners and Singapore’s NETS.

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