Chinese Fintech giants AliPay and Tenpay have just copped their first administrative penalties from regional branches of the People’s Bank of China.
On 10 May the Shanghai branch of the People’s Bank of China announced that it had fined AliPay 30,000 yuan (USD$4344) for breaches of payment regulations.
AliPay was not the only Chinese fintech to be hit with punishment, with the Shenzhen branch of PBOC issuing a fine to Tenpay for the same amount on the same day, for failure to strictly implement the provisions of the “Non-bank Payment Organization Online Payment Operation Administrative Measures.”
Analysts believe that the penalties exceed the actual infractions, and that given the timing of the announcements China’s central bank is simply sending a signal to its domestic fintech payment giants that they need to properly abide by regulations, as well setting an example for smaller players.
“Against a background of strengthened financial regulation and prevention of financial risk, the central bank is signalling its confidence and determination to further adjust and standardise the third party payment market,” said Dong Ximiao, a guest researcher at the Chongyang Financial Research Institute of the Renmin University of China.
AliPay and Tenpay are the incontestable giants of China’s mobile payments sector, accounting for over 90% of total market share. These are huge slices of an extremely lucrative pie, given surging growth in China’s non-cash transactions market, led by mobile payments.
The actual infractions committed by both companies appear to be relatively meagre. While neither company has fully clarified the reason, analysts speculate that the penalties relate to the name verification system for accounts.