China To License Domestic Online Payment Platforms

According to Ouyang Weimin, the director of Payment System Department of the People's Bank of China, PBOC plans to issue licenses to Chinese online third-party payment platforms to bring more competition and a higher level of security into this sector of the industry.

Ouyang told local media that in the non-cash economic age, it is important to develop online payment services. At the same time, third-party payment platforms can bring a large competitive advantage to online banks who might want to provide direct services themselves. For the next step, PBOC will issue licenses to Chinese third-party payment platforms to regulate and supervise the payment and settlement services of non-financial organizations.

He said with the development of e-payment business in China, the State Council requires PBOC to accelerate its adjustments to indices of e-payments to make it better reflect the economic situation in China.

Ouyang revealed while bringing third-party payment platforms into a higher level of government supervision, PBOC will improve the convenience of online banks to consumers. The organization has decided to set up an online bank interconnection platform and it will be launched by June 2010. This system is expected to improve the interconnection of different banks. For example, users who login on one online bank will be able to inquire information of bank cards issued by other banks.

The licensing does not yet appear to be open to overseas payment providers operating in China.

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