7.8billion Bank Accounts Affected by China’s New Regulation, Alipay May Suffer Most
Starting from 1st December 2016, 7.8 billion bank accounts will be impacted by China’s new regulation, a great setback for the biggest internet payment processor in China, Alipay.
The regulation policy was distributed by People’s Bank of China as an “urgent” document on 25th November as per Caijing, only one week from being implemented.
There are 7.786 billion bank accounts in total or 5.69 on average for individuals in China as of June 2016. As stipulated by the new rules, an individual can only have one Type-I account with a particular bank. For those who already have a Type-I account with a bank, they can only open Type-II or Type-III accounts with that bank.
Users need to designate Type-I account for large amount of transactions if they have multiple accounts in one bank. A Type-I bank account has all the functions of a bank account including allowing the holder to make payments, deposits, transfers and investments. There is no restriction on the amount that can be held in the Type-I account.
But you can only use it via traditional banking system.
What are the limits for Type-II and Type-III accounts? The question could be better interpreted by infograph made by CCTV:
Functions and limits of 3 types of bank account
The balance of Type III account is restricted to less than 1,000 RMB and the daily and annual transaction cap is 5,000 and 100,000. Type II account sits somewhere between the “No limits” and the 1,000 RMB threshold.
Alipay, the biggest online payment processor in China, finally released a public statement in zero hours today after days of silence. The statement is titled To crack telecom scam and secure the safety of user money, which specifies:
- One individual can only use one Type-III account on Alipay. Various accounts that are registered with one particular mobile number will be cleaned up if they are not properly justified.
- A new Alipay account that has no transaction in 6 months might be suspended and verification is needed to reactivate.
- Number of daily transaction is limited to 100 times.
In the first half of 2016, 455 million users conducted 62.644 billion transactions online in China. As the biggest online payment processor, Alipay may lose huge potions of market share due to such limits. Bitcoin is considered a potential competitor with Alipay or other online payment processors in micropayments. It’s hard to assess the impact so far.
62.644 billion transactions conducted during the first half of 2016 in China. source:qianzhan
Samson Mow, COO of BTCC, expressed his concern, he said it’s horrible：
Making spending and moving money very cumbersome.
Another important change to the money transfer via ATM is that the sender may choose settlement 24 hours after sending, or T+1 transaction.
Not long ago, the joint bankcards of China Unionpay and international payment processors are banned, which will come into effect on 1st Jan 2017.
We are seeing lots of changes from the traditional banking system. Some of which may be helpful in terms of curbing financial frauds and protecting money security. However the account categorization policy is clearly in favor of the traditional banking system.