Central bank halts virtual credit cards of Alibaba, Tencent

By Hu Xiaocen | March 14, 2014, Friday |

Online Edition

THE People’s Bank of China has halted virtual credit card and code scanning payment services by the country’s third-party payment companies, Alibaba’s Alipay and Tencent’s TenPay.

In addition to the suspension of virtual credit card and offline payments by two-dimensional code scanning, the central bank banned payment companies from providing online payment services for brick and mortar merchants. Financial institutions are prohibited from setting up payment accounts with the payment companies, according to a notice issued by the central bank.

The level of risk control for code scanning payments directly relates to the security of customers’ information and money. For the virtual credit card, it requires further study to define service providers’ obligations in verifying customer identity and protecting personal information, according to the notice.

The settlement division of the PBOC could not be reached via phone this morning.

Governor Zhou Xiaochuan said earlier that the central bank supports Internet finance innovations, and the PBOC will step up regulations in the sector to fend off potential risks.

Tencent said it is aware of the matter and will issue a public announcement later today.

Alibaba and Tencent both said on Tuesday that they had joined hands with Beijing-based China CITIC Bank, and each of them would launch 1 million virtual credit cards soon.

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Central bank halts virtual credit cards of Alibaba, Tencent

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