China has become a popular example of the potential for digital transactions to overtake cash, as its citizens’ mobile payments usage has increased exponentially in just the last few years. The use of QR codes is quickly displacing cash use across its cities.
But according to recent media reports from the region, not everyone there is necessarily happy with the disappearance of cash or the pervasiveness of mobile payments.
Earlier this month, China’s dominant mobile payment players, WeChat Pay and Alipay, launched cashless promotions, incentivizing users to use their apps in-store with free bus rides, rebates and coupons.
But subsequent reports indicate that the People’s Bank of China sent a notification to its regional banks expressing concern over possible confusion consumers might have over the promotions, and asking that merchants respect all forms of payment from their customers.
And, according to the Financial Times, China’s central bank is also separately planning to require that third-party payment companies such as Alipay and WeChat Pay channel transactions through a new clearing house. The companies have until next June to begin complying with the requirement.
The FT story quotes an iResearch analyst as saying the move may be intended to give banks access to customer data from the mobile payment companies, a move that could weaken their market dominance.
“The launch of this clearing house is a one-sided loss for the payment institutions. Originally, payment data were proprietary information for them. Now it’s connected to the clearing house, which will probably share it with other partners,” iResearch analyst Zhang Yu told the publication.