China’s central bank halts online payments

China’s central bank halts online payments

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The central bank of China halted popular credit card services, as well as barcode-based mobile payments. The recent move has been made due to the cutthroat competition in the country’s online finance services.

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A statement was issued by the People’s Bank of China on March 14, 2014, which put a stop on virtual credit card products and face-to-face payment services, such as QR code payments. Due to security concerns, the directive also put a ban on financial institutions setting up accounts on third-party payment platforms, which include Tenpay and Alipay.

Feng Xingya from the payment and settlement department of PBOC said that the central bank released an official document on March 13, 2014 to those branches which are in charge of regulating financial services offered by Tencent and Alibaba. Feng said, “We asked the relevant online payment service providers to submit documents analyzing the security of their virtual credit card and QR code payment services.”

The official from the payment and settlement department went on to say that they will undertake a security risk assessment and they have also told the relevant companies to stop offering these kinds of services on a temporary basis. Further studies are required in order to access the security of such services and the PBOC is responsible for regulating new business models.

Photo Credits: Live Mint