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Online payment providers slow to connect to new online clearing house
Over 20 third-party payment agencies, including Alipay (in Chinese), have already connected to the online payments clearing house under the People’s Bank of China by the October 15 deadline, according to the China Economic Daily. In late July, 44 companies signed an agreement to join, according to the South China Morning Post, suggesting there’s still some way to go.
In August, the China National Clearing Centre of the People’s Bank of China, the central bank, issued a document that stated that as of June 30, 2018, banks and payment agencies that conduct online payments will have to route their transactions through payment “network” Wanglian Pingtai (网联平台), or the Non-Bank Internet Payment Union, rather than making the payments directly. It was also stated that by October 15, 2017, the payment companies would have to be connected to the new clearing house.
The clearing house was set up ostensibly to safeguard consumers. There is more than money flowing through the “network”—it is very much about data. The government will get direct access to transaction details and the central bank will be able to amass huge amounts of data about the country’s spending.
For the third-party payments agencies, it is more of a mixed bag. The large ones are set to lose out, while the small ones will find the new system a fairer playing field. The likes of Alipay and Tencent Pay have worked hard to build up their direct payments platforms only now to have to reroute them through the online version of UnionPay.