Third-party payment sector rules issued

China's banking regulator and the central bank have jointly released a new set of rules on cooperation between commercial banks and third-party payment companies, media said Thursday.

The regulation was co--released by China Banking Regulatory Commission (CBRC) and the People's Bank of China (PBOC) on April 10, news portal finance.qq.com Thursday.

The new regulation features detailed rules on user information protection, user identity verification and the transaction amount during third-party payments, in a bid to reduce security risks.

The two authorities did not comment on the matter when reached by the Global Times Thursday. But Zhang Dao-sheng, a spokesman for Alibaba Group's third-party payment tool Alipay, confirmed to the Global Times the existence of such regulation.

The regulation made clear that commercial banks should set up transfer amount caps in accordance with the clients' risk tolerance ability. Some analysts consider the rule as an endorsement of the commercial banks' earlier decision to set stricter caps on quick transfers via Alipay.

In March, China's major commercial banks, including the Industrial and Commercial Bank of China (ICBC), Bank of China and the Agricultural Bank of China, all announced stricter caps on Alipay's quick transfer.

For example, ICBC set a cap of 5,000 yuan ($804) for each quick transfer via Alipay, compared with the previous cap of 50,000 yuan.

Zhang declined to comment on how the new regulation will affect Alipay's business.

The new regulation also said when both the bank and the payment firm should verify the identity of users as they use the company's third-party payment services for the first time. Banks should apply stricter supervision on large money transfers.

"The new regulation could bring about a safer payment environment for users," Feng Lin, an analyst from China E-commerce Research Center, told the Global Times Thursday.

Experts have said that apart from security concerns, banks are trying to avoid money outflow by setting a stricter cap on quick transfers. Feng said that banks will have a greater voice in cooperation efforts with third-party payment firms under the new regulation.

A Shanghai Securities News report said that commercial banks should finish revising their contracts related to third-party payment services in accordance with the new regulation by June 30.

Wang Weidong, an analyst at iResearch Consulting Group, told the Global Times Thursday that the new regulation will reduce security risks, but at the same time it may also affect users by setting so many restrictions.

More detailed rules relating the third-party payment are expected as the size of the sector is very large.

Data from iResearch showed that the total value of transactions of China's third-party payment topped 1.02 trillion yuan in the first quarter of 2014. Alipay led the market with a 47.8 percent market share.