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China’s bank caps internet payments

Daily spend limited

The PBC (People's Bank of China), which sets China's monetary policy and regulates some areas of the country's banking industry, has issued a set of guidelines that cap the amount that individuals can spend online at 1,000 renminbi (£70) per transaction, according to its website.

In addition, the newly issued document, entitled Guidelines for Electronic Payment (No.1) restricts the amount that Chinese users can spend using electronic payments made via the internet and mobile phones at 5,000 renminbi per day. The Chinese central bank said the rules are intended to limit the possibility of fraud.

Not all online payments are affected by the guidelines. Transactions that require the use of a digital signature and certificate to identify the buyer are exempted from the payment limits, according to the rules.

Online payments have just begun to gain serious traction in China, led by Alibaba.com's AliPay service, eBay's PayPal service and Shanghai-based 99Bill.

What impact the guidelines will have on these third-party payment services, and e-commerce in general, is unclear. The payment guidelines issued by PBC appear to be directed at banks. The published guidelines removed references to third-party payment providers that were included in a draft of the regulations circulated in June for feedback from the public, according to a comparison of the two documents.

The title of the regulations suggests that one or more additional sets of rules governing online payments will be issued by PBC at some point in the future, perhaps clarifying the impact on payment providers.

However, the regulations should not have a significant impact on Chinese Internet users, as those who shop online generally spend less than 1,000 renminbi, according to a survey conducted by the CNNIC (China Internet Network Information Center).

According to the CNNIC survey, 23.9 percent of Chinese internet users who shopped online said they spent more than 1,000 renminbi during the first six months of 2005. In addition, fewer than half of all internet purchases were paid for using online payment, it said.

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