chinaChina has the largest number of internet users in the world, the Chinese government also holds the reins of Internet freedom the tightest with countless terms being censored from the seemingly benign ‘temperature’ to obviously inflammatory ‘Tiananmen’.

With the online payments industry booming- see our discussion of Stripe- China’s government is proposing new regulations that would force their domestic behemoths to accept their rivals’ online payment methods in addition to their own.

The move would affect billion dollar companies like Alibaba, Tencent, and Baidu. By owning and demanding the use of an in-house payment system companies are able to collect huge profits from charging transaction fees.

"Payment institutions should fully respect customer's right to choose, and must not force customers to use the internet payment service they provide, and also must not stop customers using other Internet payment services provided by other institutions”
-People’s Bank of China

Chinese adoption of online payment has been driven by the prevalence of smartphones that are used to pay for taxis, meals and typical purchases in everyday stores. In the online market Alipay from the Ant Financial Services Group (an affiliate of Alibaba) dominates the market.

By allowing competitors like No. 2 Inc (backed by social networking and gambling company Tencent) and Baidu’s services the Chinese government are allowing free market policies into an industry that will be around for decades.

Interestingly a working paper on the PBC’s website titled Africa’s Mobile Money and Relevance for China examines how mobile payments have enabled African populations to leapfrog the traditional banking systems that are still relied upon in the West and countries that entered the ‘developing’ bracket pre-Internet. Chinese authorities are hoping to better understand how these African developments might play out in rural (i.e. under-developed) parts of China.

The People’s Bank of China is currently seeking external opinions on the draft proposals regarding enforced liberalization of the online payments market.