The central bank in China is clamping down on mobile payments made via a barcode and scanning devices, a move that could negatively impact Ant Financial, the financial services affiliate of Alibaba and Tencent, the Chinese rival.
According to a report in Financial Times, regulators in China have placed daily limits on the amount consumers can spend via a barcode payment system. The People’s Bank of China said that while barcode payments have played a role in financial inclusion, there is a lack of rules and technical standards that create “hidden dangers” and unfair competition.
Under the new rules, payments by a single person using a static barcode are limited to $76 per day. Additional limits apply to barcode payers who didn’t complete authentication procedures.
“The market has developed so fast and has become an important payment method, but there are still some technical and market competition problems that need to be brought under control,” said Dong Ximiao, senior analyst at Renmin University’s Chongyang Institute for Financial Studies in Beijing.
The report noted that China is the leader when it comes to mobile payments, many of which are made via scanning a QR code. In 2016, the value of Chinese third-party mobile payments hit $5.5 trillion, and the fast growth is continuing throughout this year. Alipay, which is operated by Ant Financial, is the leading digital payment service in China, followed by Tencent-owned WeChat.
When it comes to barcode payments, regulators in China are particularly worried about the use of static QR codes, including ones that are placed inside the windows of stores. The codes can be shared, enabling unknown parties to use them to get anonymous payments. Regulators have contended that the static QR codes have also allowed payment companies to get around “know your customer” obligations, reported Financial Times.