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Why China Has Banned QR Code ePayments
Posted By Roger On March 14, 2014 @ 11:46 am In News | No Comments
The People’s Bank of China (PBOC) issued a notice on Friday that halted virtual credit card products as well as payment operations using QR Codes. The bank cited safety risks but it is more likely to be the central bank’s concern that it was loosing control of consumer credit services to Internet companies. The ban affects both China’s largest listed Internet company Tencent and e-commerce firm Alibaba who own Alipay, an online payment escrow service that accounts for roughly half of all online payment transactions within China. The PBOC is asking the companies to submit detailed reports on their procedures. The PBOC keeps very tight control of China’s monetary policy and tends to over regulate financial institutions. When the bank has found a framework to control the rapid growth in China’s online financial services we can expect virtual credit card products to return but almost certainly with restrictions. It is probably no coincidence that the PBOC notice comes just a few days before China CITIC Bank planned to issue one million virtual credit cards (using Alipay Wallet) with the creditworthiness of applicants based solely on the consumers’ online shopping histories.
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