The People’s Bank of China has notified third-party payment firms that they will have to deposit all of their reserves of client funds into a centralised account by January of next year, Caixin reports.
In a statement issued on Friday, the central bank said that firms should gradually increase their reserve rates each month from the existing 50% rate, starting July 9th.
By conferring all of customers’ deposits to a government custodian, payment firms sacrifice the ability to invest and earn interest on the funds.