China’s central bank said on Friday that it will eventually ban all non-bank payment agencies, including Alipay, from using clients’ money. As a first step, it will require all platforms to deposit some 20 percent of clients’ funds to appointed bank accounts. The 20 percent level aims to leave time for institutions to adapt to new rules,” said Xie Zhong, head of the central bank’s payment and settlement department. “The final level will be 100 percent,” meaning that the central bank will be the only authority governing provisions.
In my view this is a further attempt to regulate the online payment industry in China and try to protect customer deposits. Maybe a negative impact on Alibaba who was pushing to enter the banking industry but, without a banking license, it is proving tricky.