China’s Central Bank Floats Online Transaction Limits
Aug. 3, 2015
On Friday, the People’s Bank of China (PBOC) published a proposal that would place regulatory limits on the size of online transactions made through third-party systems like Alipay. The central bank proposed limiting third-party online payments to between 1,000 and 5,000 yuan ($161 to $805) depending on the security adopted by the third party. The proposed regulation also limits yearly expenditures to 100,000 yuan ($16,093).
Platforms that require a digital certification and authenticated signature would not need to abide by the restrictions. Systems that have one of the requirements would carry the $160 limit. Third-party platforms that do not include digital certification or a signature, but have two or more other checks would limit consumers to the $805 limit. According to Xinhua, the state-controlled news agency, the limits are based on average online spending data. The PBOC is accepting public comment on the proposal until Aug. 28.
The announcement comes as e-commerce in China, especially via mobile device, continues to explode. In fact, a new report from eMarketer late last week said retail e-commerce sales via mobile devices will reach nearly $334 billion—nearly half of all online retail in China. Those numbers will grow steadily, the report said, reaching more than $1.4 trillion in 2019, accounting for a startling 71.5 percent of retail e-commerce sales and 24 percent of total retail sales in the country.
An editorial in the South China Post yesterday, however, said if the PBOC’s draft is enacted as written, “it would hurt Alipay’s business significantly and also the entire business-to-consumer system in China.”