China issues banking rules to strengthen online payment security

Monday 21 April 2014 09:53 CET | News

China has issued rules to limit the amount of money consumers can transfer to third-party online payment platforms, aiming to protect banks and consumers from fraud.

Banks will be obliged to limit how much money an individual can transfer to platforms such as Alibaba Group Holdings Alipay per transaction or on a single day, based on the persons financial status, showed a document issued by the central bank and banking regulator.

Lenders such as the Industrial and Commercial Bank of China Ltd already limit transfers to Alipay to USD 8000 (CNY 50,000) per month, in part to slow deposits leaving for high-yielding money-market funds.

By June 30, 2014 all banks must be prepared to implement transaction limits and also establish a means of verifying consumers identities when they link their accounts at third-party payment platforms to their bank accounts.

China is set to overtake the US as the worlds largest online retail economy this year, according to consultancy McKinsey, after online and mobile payments rose 47% year to USD 863.48 billion, showed data from Beijing-based consultancy iResearch.

Among other measures announced in the authorities document, banks will have to set up virtual private networks (VPNs), firewalls and other dedicated channels to prevent the third parties from accessing the banks internal data.

Banks must also analyse clients ability to sustain risk before letting them make payments through third parties, and conduct real-time supervision of clients third-party payment activity.

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Keywords: China, banking, online payment security, online fraud
Categories: Fraud & Financial Crime
Countries: World
This article is part of category

Fraud & Financial Crime

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