A number of Chinese banks have lowered payment limits on March 28th for third-party online payment providers in an effort to reduce internet fraud.
In 2009, Industrial and Commercial Bank of China (ICBC, 601398.SH, 1398.HK) reduced the payment limit per transaction through its general edition online payment system from RMB 5,000 to RMB 500 due to safety concerns.
More banks are now following ICBC’s lead. China Merchants Bank Co. Ltd. (CMC, 600036.SH), one of the most popular commercial banks in the country, recently announcement that the bank would lower its maximum payment limit for third-party online trading, and the highest limitation for general edition online payment system down to RMB 500 per deal/day from RMB 5,000 previously.
Online fraud has led to massive losses for individuals and banks. As more Chinese citizens go online there are over 400 million internet users in the country – and e-commerce becomes more popular, lenders are looking to reduce risks.
By December 2010, the turnover of China’s e-commerce market reached more than RMB 4.5 trillion, up 22% year-on-year, according to data from the China E-commerce Research Center. So far, more than RMB 7.6 billion has been swindled through cloned bank websites and the theft of users’ account details, and the biggest losses can run into millions of RMB, according to the National Computer Network Emergency Response Technical Team/Coordinating Center.
In order to significantly reduce the risk of fraud, many banks have been upgrading the security of their online payment systems and have issued new rules for online payments.
However, these precautions are starting to irritate some consumers who make large internet purchases. One female consumer complained that even an upper limit of RMB 1,000 per transaction is not enough, as her average cosmetic and electronic product purchases are always higher than that figure. She added that most of her deals are conducted through general edition online payment system previously and that she is reluctant to use the professional edition because it is too complicated. Other internet users believe these measures could help them minimize their losses, even if they accidentally browse a fake website.
The marketing official from Alipay.com Co. Ltd., China’s largest third-party platform, told us that the news that banks were lowering payment limits was good for users of online payment platforms as it could significantly help reduce their losses. He said the stricter measures wouldn’t affect his company’s performance because users can choose from a variety of secure online payment systems such as mobile phone confirmation systems, Ukey payment systems, and other professional payment tools, as well as asking friends to help them make large purchases.