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China's central bank says it will allow non-bank payment service providers to offer online payment services. Non-bank payment services such as Alipay and Paypal will be supervised by the People's Bank of China under the new regulation.
The rules come into effect in September, and require third-party payment agencies to apply for a license from the central bank. Licensed providers will be required to submit financial reports and client information to the central bank. Commissions charged for the service are also subject to the bank's approval. Experts say the move will help protect clients from transaction risks.
Kan Kaili, Professor of Beijing University of Posts and Telecommunication said "If clients put their money into the bank, the central bank will have a requirement on its 'guaranty money on deposits'. But you don't get this with non-bank payment service providers. So the security of the clients might be severely compromised. And if you put hundreds billions of money in the hands of the non-bank bodies, it will definitely cause financial risk."