21st Century Business Herald, 3/14/14
A source at the People's Bank of China (PBoC), China's central bank, has confirmed that the PBoC issued urgent letters to its Hangzhou and Shenzhen branch banks on the afternoon of March 13, requiring the suspension of online credit card products recently released by Chinese third-party payment processor Alipay and internet and mobile services firm Tencent (0700.HK). In the same letter, the PBoC has suspended offline barcode-based payments (including QR code payment).
According to a portion of the PBoC letter available online relating to Alipay, further clarity is required regarding offline barcode payment technology and terminal security standards. According to the letter, further investigation must be conducted into user client identification and the security of user information with virtual credit cards. The letter asks Alipay to temporarily halt offline barcode payments and virtual credit card services until the company can submit a report in writing to its corresponding regulatory branch in Hangzhou. The PBoC has asked Alipay to provide details of its products, management systems, operating procedures, company partnerships, as well as profit distribution mechanisms, customer guarantee mechanisms, and emergency protocols. The Hangzhou branch of the PBoC has been tasked with assessing compliance and security of these services, with a report to be submitted to the PBoC on March 31 that includes the submitted materials from Alipay along with relevant oversight recommendations.
Editor's Note: Chen Liang, director of public relations at Alipay, announced today on his microblog that Alipay has already issued a report to the PBoC and will submit the requested materials. For more background on this topic, please see "Update: Alipay Announces Details of CITIC Online Credit Cards" MD 3/12/14 issue.