The Chinese central bank has flagged further tight control of the payments and settlements sector alongside a strong emphasis upon security.
Fan Shuangwen, deputy director general of the People’s Bank of China’s (PBOC) payment regulatory department, said at a symposium hosted by the National Institution of Financial Development that safety remained the key priority for the central bank’s regulation of the payments sector.
“Standardisation and security will remain the most important tasks as regulators try to prevent and tackle market risks,” said Fan according to a report from the South China Morning Post.
According to Fan regulators need to exercise a strong role in the Chinese payments sector, given that social responsibility is never the primary concern of market actors.
“It’s unrealistic to pin our hopes on market entities to prioritise social responsibility,” he said. “The responsibility of regulators should be to maintain fairness, market order and competition, and create a good environment for innovation.”
The Chinese central government has been tightening its grip on the online payments sector, which is heavily dominated by the country’s internet giants.
A report on the payments and settlements sector released by NIFD on Friday indicates that Alibaba-vehicle Alipay is the leader of the Chinese online payments sector, with a 29.2% market share in 2017.
Tencent’s Tenpay came in second with an 18.3% market share, followed by government-owned UnionPay with 16.3%.
Fan said the potential for oligopoly and associated security issues were a major concern for Chinese financial regulators.
“It’s important to study how to prevent the abuse of market dominance, and the use of such actions as exclusive service, binding sales agreements, subsidies and price discrimination that curb the development of medium and small businesses,” he said.
In order to better scrutinise and regulate China’s online payments sector, financial authorities established a national clearing house last year under the control of UnionPay.
While private companies were previously permitted to settlement payments with commercial banks directly, all online payments will be shifted to the platform for settlement by the end of June.
In addition to stepping up control of domestic payments entities, Beijing is also maintaining firm barricades against foreign entry into the market, despite repeated avowals that it would further open the financial sector to overseas investment.
Beijing has not yet granted any payments licenses to foreign investors, with PBOC only revealing last month that it had received an application from London-based cross-border payments company World First.