The People’s Bank of China (PBoC) has ordered all online payment companies to channel mobile payments through a new clearing house by next June, which could have an impact on the dominance of Ant Financial and Tencent.

According to The Financial Times, the move would force both companies to share valuable transaction data with competitors.

China is the world leader in mobile payments, with transaction volumes rising last year to Rmb59tn ($8.8tn). Ant Financial, the financial services affiliate of Alibaba Group, is the leader in mobile payments, with its Alipay unit processing 54 percent share of all transactions in the first quarter of the year. And WeChat Pay, linked to Tencent’s mobile messaging app, held a 40 percent share.

In addition to generating fees, online and mobile payments supply valuable data that can be used for things like targeted advertising and credit scoring.

“The launch of this clearing house is a one-sided loss for the payment institutions. Originally, payment data were proprietary information for them. Now it’s connected to the clearing house, which will probably share it with other partners,” said Zhang Yi, FinTech analyst at iResearch, a consultancy.

The analyst believes that the central bank wants to help commercial banks obtain customer data, as well as prevent Alipay and Tencent from gaining excessive market power.

While hundreds of millions of Chinese consumers and businesses have linked their Alipay or WeChat Pay accounts to their bank accounts, financial institutions do not gain access to payment details, such as the merchant’s name and location. Instead, the bank record shows Alipay or WeChat as the recipient. But the latest PBoC instructions require all payment companies to connect to the clearing house by October 15 and to channel all payments through it by June 30.

“We are actively participating in the preparation work and will complete the adjustment according to the requirements of central bank,” Ant Financial spokesman Anna Wang said.

The PBoC and Tencent did not respond to a request for comment.


Source: http://www.pymnts.com – Payments
China’s Central Bank Orders New Clearing House For Online Payment Groups