Tencent and Alibaba Hit by PBOC Halting Virtual Credit Cards.
The central bank of China had demanded last Friday, that any payment done by scanning a barcode with mobile devices to be halted, causing some serious trouble with internet companies Alibaba and Tencent, who rely on virtual payment, amid concerns over security of their verification methods.
This move is one of the many latest clashes between the Chinese financial sector and China’s internet companies, which have entrenched into the banks territory by amping up their own financial services, with offers of online payment services and fortune management products.
Both the eCommerce firm Alibaba and Chinese largest listed internet company, Tencent, have confirmed of receiving notices from the People’s Bank of China (PBOC) about this recent move. A spokesman for the PBOC has stated that the banks are requesting the companies to submit a detailed report on their methods.
“The notice was issued all of a sudden … This notice had a great impact on our business,” spoke an official from Aliplay, Alibaba’s online payment affiliate, who wished to remain anonymous of their identity due to have not been authorized to speak out to the media.
The Decline in Shares.
Current share for for Tencent declined by 6.4 percent, while China Citic bank shares followed by lowering in Hong Kong and Shanghai. Citic Bank has commented that will cooperation with Tencent and Alibaba in the use of virtual cards that both companies use through QR codes for payment. Shares for Citic bank where suspending during the middle of the day in Hong Kong after dropping 7 percent.
Back in December, PBOC had previous commented that it would closely watch the development of online financial services to make sure the companies would not overstep an legal bound lines.
“If the government is pushing back on the QR code thing, it’s probably a temporary thing until the government figures out what is going on,” said Michael Clendenin, managing director of Shanghai-based RedTech Advisors.
Citic Bank has mentioned that it has as of yet to receive any documentation from the PBOC.
During this week, both Alibaba and Tencent have received licences from the bank regulator to participated in a trail plan for privately owned banks. Both companies have announced there planks of launching virtual credit cards. These cards will allow customers to utilize credit to pay for product through either Alibaba’s or Tencent payment arms.