PBOC Puts Pressure on Third Party Payments with over 30 Fines in 2018


The Chinese central bank is stepping up the pressure on the country’s third party payments providers in 2018, after first beginning to scrutinise the sector two years ago.

Data from the People’s Bank of China (PBOC) indicates that since the start of 2018 it has issued over 25 payments companies with at least 30 penalties worth a total of 46 million yuan.

PBOC first began to step up its scrutiny of the third party payments sector in 2016, and has since  rapidly raised the pressure on the sector.

While only 34 fines were issued to third party payments providers in 2016, this figure surged to109 last year.

The biggest fine in 2018 thus far was issued to Dinpay in May, for the provision of payment services to multiple offshore online platforms that engage in illegal gold and speculative forex transactions.

The State Administration of Foreign Exchange and the Shenzhen branch of PBOC issued penalties to Dinpay worth a total of 41.52 million yuan, with PBOC declaring that the company had provided cross-border forex payments for online trading platforms that engaged in illegal gold and speculative forex transactions on the basis of fake goods transactions, as well as failed to adopt effective measures and technological means to inspect the transaction information of domestic online merchants.

The Chinese central bank has also targeted the titans of China’s third party payments sector, issuing Alibaba-owned Alipay with three fines since 2017.

Both Alipay and Tencent-owned Tenpay received fines in the first half of 2017 for breaching the “Non-bank Payments Organisation Internet Payment Operations Administrative Measures” (非银行支付机构网络支付业务管理办法).

Alipay was subsequently fined 600,000 yuan in November 2017 for regulatory infractions in relation to cross-border payments, and 180,000 yuan in April of this year for breaches in relation to customer rights, product advertising and protection of personal information.

PBOC has signalled that heavy pressure on third party payments providers will continue in future, with its payments and settlements department issuing the “2018 Key Sample Inspection Work Guidance Opinions” (2018年重点抽查工作指导意见) in April, outlining a focus on unlicensed payments providers and the proper management of deposits by payments entities.

On 14 May Xie Zhong(谢众), head of PBOC’s payments and settlements department, said that in 2018 PBOC would continue to vigorously advance the establishment of a non-cash payments environment, and guide market players in the provision of safer and more convenient payments products to companies and consumers.

PBOC will also further expand market regulation, prevent and resolve financial risk, and unrelentingly deal with as well as punish various forms of payment conduct that are in breach of regulations.