Top meeting calls for strengthened regulation on online payment businesses
Published: Jun 22, 2022 10:47 PM
Online payment app Illustration: VCG

Online payment app Illustration: VCG

At a key financial meeting on Wednesday, top Chinese officials said that China would include platform companies' payment businesses and other financial activities into the scope of government supervision, while pushing large payment companies to "go back to their basics" and prevent systemic financial risks.   

The government's move to strengthen oversight of platforms' payment business is aimed at stemming potential financial risks at a time when many internet platforms are crossing over to launch their own online payment tools, experts noted. 

The 26th meeting of the Central Commission for Comprehensively Deepening Reform stressed that China would strengthen payment regulations and systems and risk prevention mechanisms, intensify whole-chain, all-field supervision, as well as insist that platforms must hold licenses to carry out financial business, according to the Xinhua News Agency.

Moreover, China would push large payment and fintech platforms to "return to their basics," improve regulatory rules, supplement systemic weaknesses, safeguard the safety of payments and financial infrastructure, as well as prevent and resolve hidden dangers of systemic financial risks, the meeting concluded.

At the meeting, a work program to strengthen management of large-scale payment platform companies and boost the healthy development of payment and fintech platforms was also reviewed and adopted, Xinhua reported.  

Fu Liang, a veteran tech analyst, told the Global Times on Wednesday that China is moving to strengthen management on payment businesses at a time when many internet companies have launched their own payment tools.

"This might cause a large amount of capital to flow out of China's traditional capital management system, like banks, to those platforms. It also gives birth to many more new risks, such as financial fraud, if those platforms don't know how to manage the capital properly," Fu said. 

Besides intensifying payment oversight, officials also stressed that they would raise supervision of platform companies. 

The meeting on Wednesday noted that China would protect the legitimate rights of financial consumers, strengthen platform companies' anti-monopoly and anti-competitive management, regulate algorithm discrimination and strengthen data management.

Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times that China will continue to be vigilant on the management of large online entities, as their burgeoning scale could pose risks. 

"The platform economy's development pace has been too fast, and policymakers are worrying that it will get out of control, as signs have shown that those platforms' business styles can pose dangers to customers and to society, such as hindering many companies' survival space because of monopoly operations," he said. 

Global Times