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Regulator's responsibility

(China Daily)
Updated: 2009-04-08 07:46

An industry-wide warning by the China Banking Regulatory Commission (CBRC) on the risk of online payments is well justified given that some e-commerce frauds have already been exposed in this country.

But by suggesting domestic banks charge online fees or simply cut such business to avoid risk, the banking watchdog seems to have put the industry's interests above that of the public.

It was reported that China's banking regulator recently issued a warning on the business risk of Alipay, the country's largest third-party online payment platform.

The warning, in itself, shows that the regulator is highly vigilant when it comes to emerging business risks for Chinese banks.

Rapid growth of e-commerce and a surge in the number of online shoppers in recent years have led to a boom of online payments for Chinese banks.

But the use of loosely regulated online business and online payment to defraud consumers has also been on the increase.

The banking regulator has correctly identified the problem.

But its solution is slightly better than throwing the baby out with the bath water.

On one hand, additional charges on online payments are just too much for millions of online shoppers or sellers to understand.

If the banking watchdog cannot explain why online payments will be safer if charges are increased, its suggestion to impose such a fee will smack of self-interest.

On the other hand, the notion that domestic banks should take back support for online payments to avoid related risks sounds more like a threat to the providers of online payment platforms than a serious regulatory response to emerging safety problems.

A convenient and safe online payment platform is central to the boom of China's e-commerce, which not only benefits Chinese consumers tremendously but also creates a large number of much-needed jobs.

Young people are increasingly turning to online shops built on the Alipay third-party online payment platform as a part-time or full time job.

Huge unemployment pressure should make any attempt to undermine job-generating e-commerce simply unimaginable.

Concerted efforts by banking, telecom and pubic security sides and users, instead of action taken by any private service provider alone, are needed to stem online fraud.

And banks and service providers should negotiate to share potential yields from the rising business.

The top responsibility of the banking watchdog should be protecting the public and the national economy from banks' irresponsible risk-taking.

A profitable banking sector is desirable, but the regulator should not mistake means as an end.

(China Daily 04/08/2009 page8)