The People’s Bank of China (PBOC) has placed a temporary ban on payments made by scanning quick-response (QR) codes with mobile devices. The move by China’s central bank, which was announced on 14th March, is aimed at stopping, at least for the moment, the upcoming launch of ‘virtual credit cards’ by major Internet companies.
Alibaba, China’s leading e-commerce company, and Tencent, a popular Internet platform hosting social and mobile services, recently announced that they would seek to launch such virtual credit cards – which will utilize QR codes – as an alternative to traditional credit cards.
The PBOC cited security concerns as the reason for the decision. Both Alibaba and Tencent are currently communicating with the PBOC in the hopes of getting the green light for the launch of the services. However, reports suggest the companies are facing substantial hurdles in their deliberations.
Estimates suggest that Alipay processes around $660bn in payments annually from roughly 300 million users, while Tenpay has more than 100 million users and has gained significant ground in 2013 and 2014.
Zhou Jinhuang, the Central Bank’s vice director of the payment and settlement department, said that, while PBoC is always supportive of innovation in the finance sector, payments via code scanning and virtual credit cards are closely linked to consumers’ personal information, and therefore require further consideration.
The PBoC may also have been acting to protect UnionPay, the Chinese state-owned payment system that processes most of the country’s debit and credit cards, the Financial Times said. UnionPay does not receive revenue from transactions made via QR codes and mobile phones.
Though the QR code halt may only be temporary, these moves signal that the PBOC is looking to restrict the growth of new, technology-enabled payment services, according to coindesk.com. This could ultimately mean more hurdles are likely to arise for Alibaba and Tencent, as well as for alternative technologies such as bitcoin and related businesses.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below: