The first guideline clearly states the governments support for internet companies to set up online payment institutions, online lending platforms, equity-based crowdfunding platforms, and online platforms for selling financial products, wantchinatimes.com reports, citing the Economic Observer, a Chinese economic weekly. This is to establish multiple financial services systems to better satisfy the investment and financing demands of small and medium-sized enterprises and individuals and further expand the width and depth of financial inclusion.
This guideline seems to signal that the PBOC may issue new licenses for third-party payment services, market insiders said, the source cites. The central bank has suspended the issuance since releasing the last batch of 19 such licenses on July 10, 2014.
It has been more than four years since the PBOC issued the first batch of payment licenses in May 2011, and the total number of licensed payment institutions has now reached 269. But, as of the end of 2014, only 112 payment institutions were approved to engage in internet payment services, according to statistics released by the Payment and Clearing Association of China (PCAC), the source cites.
In fact, only a few of third-party payment service providers have managed to stay profitable and work out strategies for sustainable development. The top 10 providers, including Alipay, UnionPay, Tenpay, and YeePay, together account for nearly 87.1% of the third-party payment market, with the remaining 102 other firms sharing the remaining 12.89%. Internet finance is emerging mainly because the traditional banking industry neglected online payment services, said Xiao Sa, a partner at the Beijing-based Dacheng Law Offices.
With Alipay operated by Alibabas financial affiliate Ant Financial, Tenpay supported by Tencent, and JDpay managed by JD.com., its imperative for other small third-party payment service providers to seek similar supporters behind them or cooperate with leading providers.
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