China's central bank to regulate online payment industry

Third party payment service providers such as Alipay and Paypal will be supervised by the People’s Bank of China under new rules released Monday, Reuters reported. The rules – an effort to bring more oversight to the online payments industry – require non-bank payment agencies to apply for a licence from the central bank and will take effect in September. Licensed providers will be required to submit financial reports and client information to the PBoC, while commission rates will be subject to approval as well. In addition, a special reserve account must be set up at a commercial bank if the agency takes client deposits. The rules give the central bank oversight of a large payments network that has emerged outside the traditional banking system because of the boom in online commerce. Alipay, a platform developed by e-commerce giant Alibaba.com (HK.1688), and its peers have been operating in a legal vacuum thus far, as no laws existed for their industry.