China’s two largest mobile payment services Alipay and Tenpay have recently been fined by People’s Bank of China, the country’s central bank. The two payment services were each given a fine of RMB 30,000 by the central bank’s branches in Shanghai and Shenzhen.
Although the central bank did not give a specific reason for the fines in its announcement (only used a vague wording that they violated payment industry regulations), the two payment services revealed that it is because of their failure to fully implement of user identity verification in account registration.
A regulation issued by the central bank last May mandates that any non-banking online payment institutions set up a real-name registration system.
This is the first time that the two online payment tycoons have been fined by the central bank. Although the paltry sum is a drop in the bucket, it serves more as a warning and signals the central bank’s determination to straighten out the online payment market. China has been making concerted efforts to guard against financial risks ahead of a key party congress in the latter half of this year.
As the two largest online payment services in China, Alipay (54.1% share) and Tenpay (37.02%) combined made up 91% share in the country’s online payment market in the fourth quarter of 2016, a report by market research service Analysys shows.
Since the end of 2014, the central bank has imposed roughly 70 fines on 47 online payment firms, ranging from RMB 30,000 to tens of millions of RMB. YeePay (易宝支付) was fined RMB 52.96 million due to violations of liquidation regulations last August, the heftiest fine ever from the central bank.
Although both Alipay and Tenpay have made great efforts to abide by the authentication requirements, it seems to make sense they have been unable to verify the identities of all of their users, given their vast user bases.
Alipay had 450 million verified users in 2016, while Tenpay also boasts hundreds of millions of users, with the backing of Tencent’s ubiquitous messaging app WeChat which claims 889 million MAU.
The two payment services accepted the decision and support the regulation. Alipay said that they started their system upgrade and overhaul since the beginning of last year, and have been working actively to make users accept real-name registration and complete the identity verification.