The People’s Bank of China (PBOC) have announced that it will pay interest on trillions of yuan in customers deposits that Chinese payments companies are required to hold with the central bank.
Since 14 January 2019 PBOC has required that all of China’s non-bank third party payments providers place 100% of their customer deposits at interest-free accounts with the central bank.
The move deprived payments providers of a highly lucrative earnings stream of billions of yuan in interest revenues from deposits that payments providers had previously placed with commercial banks.
PBOC has just announced that it will reverse the “no interest” policy it first implemented in 2017 when transfers of customer deposits commenced, by providing an annual interest rate of 0.35% to third party payments platforms.
Analysts say that while the move was expected, the rate is half that anticipated by the Chinese payments sector.