Uncertainty Surrounds PBOC Targeting of Alipay, WeChat Business Use of Personal Codes

In China, what seems to be a crackdown on Big Tech — on the payments giants in particular — continues.

Or maybe not, depending on where you look.

And thus, some confusion reigns, at least for now.

To that end, as reported by Crowdfundinsider.com, the People’s Bank of China (PBOC) has banned the WeChat and Alipay payment codes for business beginning in March 2022.

In a translation of Chinese language accounts contained in China News, Crowfundinsider.com noted that the “notice” is reportedly aligned to “better protect the legitimate rights and interests of consumers and will help prevent criminals from stealing consumer personal information and even embezzling account funds by modifying payment acceptance terminals and applying for false merchants.”

Separately, and as reported by PanDaily, with a nod toward the granularity and the mechanics of the ban — and, again, translated from the Chinese — it is the personal static codes that are being removed from use by businesses. The ban, according to reports, extends to payment acceptance terminal businesses, special merchants and acquiring business monitoring.

To get a sense of the mechanics of personal static collection codes, the personal static collection codes would ostensibly be banned from remote transactions (i.e, those not being conducted face to face at the terminal), among other settings.

And the PBOC has fired back. The Global Times reported that, per a statement from the bank, the mainstream media reports are “misleading.”

The Global Times reported a spokesperson from the PBOC has said the new regulation aims to strengthen industry management, close loopholes, cut off illegal chains and better protect the safety of individual merchant’s funds.

Want some further attempts at clarity, which we contend might only muddy that waters a bit?

Blockworks reported the PBOC is simply requiring that businesses use business payment codes instead of personal ones, which is “a common scheme for small family-run businesses.”

“The government has decided to strengthen supervision due to the hidden risks of personal payment barcodes,” Tony Ling, a partner at China-based Bizantine Capital, said per the report. “For example, some institutions use barcode transfer services for personal receipts to handle large-scale [recurring commercial transactions]. This not only confuses the nature of the transaction, but also leads to the distortion of transaction information, which affects risk monitoring.”

Whew.

That’s a lot of back and forth.

Yet, we note that the most recent changes come in the wake of a series of actions taken by regulators and the PBOC toward the payments giants. Through the past several months, the PBOC has sought to pave the path, as it were, for the smooth issuance of the digital yuan. And bit by bit, it may be the case that putting up at least some guardrails against the way business — even digital business — has usually been done, the natural inclination may be for consumers, and now businesses, to really embrace a central bank digital currency (CBDC).

Most of the 1.4 billion people in China use either Alipay or WeChat Pay to make mobile payments, and the PBOC has said the digital yuan might serve as a backup to the established payments juggernauts.

Read more: China Bank Wants Digital Yuan to Dominate Alipay and WeChat Pay

Whether the latest news is a tempest in a teapot or something more seismic remains to be seen.