CHINA plans to tighten regulations governing the nation’s 270 online-payment firms including Alibaba Group Holding Ltd.’s finance arm, to ensure security for consumers’ information and money.

    Under draft rules published July 31, the central bank will limit the amount an individual can pay online to 5,000 yuan (US$805) per day through third-party payment accounts, unless the customer’s identity can be verified by a security token and electronic signature. Where they are spending more than the sum allowed, consumers would be transferred to banking payment platforms to pay the surplus, the central bank proposal said.

    Customers with at least five methods of verifications can open a so-called “comprehensive account,” which limits annual online or mobile payments to 200,000 yuan per person. With three to five verification methods, customers can only open a “consumption account,” with an annual transaction limit of 100,000 yuan.

    The People’s Bank of China (PBOC) is seeking public feedback by Aug. 28.

    The regulation is based on surveys of Chinese consumers’ average spending via third-party payment platforms last year, according to an unnamed source from the PBOC.

    “About 61.3 percent of customers spent or transferred no more than 1,000 yuan in 2014, while 80.1 percent less than 5,000 yuan,” a central bank official said to Xinhua News Agency at the weekend.

    Third-party payment companies that have the licenses to operate online lenders such as Alibaba’s Zhejiang Ant Small & Micro Financial Services Group Co. and Tencent Holdings Ltd. will have an edge over other players, which are not allowed to offer full financial services through third-party payment accounts, analysts wrote.

    Ant Financial’s MYbank and Tencent’s WeBank are among a wave of new private banks being licensed by the government to target small loans and aim to use facial-recognition software to let users set up accounts.

    The rules of third-party payment accounts followed measures imposed last month on the nation’s more than 2,000 peer-to-peer websites.

    Internet finance firms must park all client funds at established banks and must obtain approvals from financial as well as cyberspace regulators, the PBOC said July 18. The sites must also provide sufficient disclosure and send risk reminders to customers.

    (SD-Agencies)