PBOC to regulate, not kill, online finance

The People's Bank of China, the central bank, is exploring possible Internet financing regulation with executives of some Internet finance companies and people in relevant fields this week, a person involved in the meetings told China Daily.

"The central bank is still supporting online finance. It intends to cool the red-hot Internet finance sector rather than quenching its blaze," Huang Zhen, a law school professor of the Central University of Finance and Economics, said. "Banking regulators expect Internet companies to have good security management while making financial innovations."

Huang, a specialist in Internet finance, attended meetings held by the PBOC on Wednesday and Thursday.

The central bank is willing to restrict one-off money transfers through individual third-party payments to 1,000 yuan ($162) and cap total transfers at an annual 10,000 yuan, according to a draft for consultation circulated widely on the Internet.

It also plans to restrict single purchases using third-party payment accounts to 5,000 yuan, with a monthly limit of 10,000 yuan.

The PBOC cited security concerns in a March 14 directive to halt virtual credit cards and QR code payments. China CITIC Bank had planned to launch two virtual credit cards with Alipay and Tenpay, third-party online payment platforms of Internet giants Alibaba Group Holding Ltd and Tencent Holdings Ltd respectively.

Some experts emphasized the latest PBOC move should not be regarded as a crackdown on Internet finance.

"The central bank put forward requirements on QR code payments in the hope of promoting the safe and healthy development of mobile payment," Huang said.

"The central bank supports financial innovations in general but needs to further clarify the rules on actual operation," Tencent President Martin Lau said.

"Internet finance is a new thing. We are in close communication with regulatory authorities," he told a news conference in Hong Kong on Wednesday. "Tencent is making an initial attempt in this field. We should be cautious, but we remain optimistic."

Alipay, the third-party online payment platform of Alibaba, said in a statement it is "actively communicating" with the PBOC.

"The regulation document is still under consultation and will go through many drafts before it is finally launched. We have reported our opinions to the central bank," the company said.

Huang of the Central University of Finance and Economics said the central bank is taking a lead in forming an association of Internet finance.

Contact the writers at jiangxueqing@chinadaily.com.cn and mengjing@chinadaily.com.cn