Business / Gadgets

Online finance needs more checks

By He Yini (chinadaily.com.cn) Updated: 2014-03-31 10:46

As Internet finance increasingly becomes red-hot in China, many people are itching to piggyback on its success, expecting to grab a piece of the growing pie.

But with increasing investors' appetite comes equally noticeable weariness over potential risks in the emerging industry. Officials and entrepreneurs in the country are now calling for tighter regulation to better streamline the market.

"Internet is an open source. But there has to be rules when it comes to financing on that platform because we have to keep risks at bay in the first place," said Xu Nuojin, an official with the People's Bank of China, in a keynote speech Friday at the Spring summit of 2014 China Internet Finance Conference.

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Online finance is all about money, which hinges on credit and thus has risks, albeit driven by Internet technologies, including cloud computing and big data, he said.

Xu, deputy head of PBOC's Statistics and Analysis Department, said a viable way to regulate the industry is to raise the access bar amid competition. "A sound development begs an efficient regulatory system."

The central bank has been leading a government effort to stem potential risks from the bourgeoning industry, after Premier Li Keqiang vowed in his work report to promote the healthy growth of Internet finance by improving financial regulation during the just concluded two sessions.

On March 14, the bank put the brakes on QR code payments as well as virtual credit cards expected to be launched by China CITIC Bank jointly with Alibaba's Alipay and Tencent's Tenpay, both third-party online payment platforms.

The PBOC has also been mulling plans to restrict single purchases and one-off money transfers via third-party online payments.

Third-party online payments have witnessed an explosive growth in the past few years. Statistics from EnfoDesk Analysys International show transactions via the platforms hit 17.9 trillion yuan last year, up 43.2 percent from a year earlier.

"Online payment is just a branch of the Internet finance industry, albeit a popular and significant one," said Zhong Jianwen, deputy general manager of Hexun.com, a leading online platform in China providing financial information services.