In a bid to further regulate the operations of e-payment platforms, the PBoC raised the reserve funds ratio of payment platforms from 20% to 50% on 30 December 2017. The move was designed to better track ho funds are used by bringing more e-wallet deposits and funds held in escrow by payment providers under the PBoC’s centralized management. The ratio, effective from April 2018, will be gradually increased to 100% over time. It holds a strong promise to erase hundreds of millions of yuan in interest fees that providers such as Tencent and Ant Financial currently receive by parking an estimated $75 billion in reserves in commercial banks. Further, PBoC imposed caps on payments made by QR code. Based on the new security measure and user credentials, transaction limits are set at 500 yuan ($77), 1000 yuan ($154) or 5,000 yuan ($769), which will adversely affect the purchase of big ticket items.
Traditional banks must evaluate their place within the payments ecosystem and be open to partnering with FinTechs and third-party developers to drive value collaboratively.
Structural changes are spurring payments industry participants to evaluate the future of the business as well as their role in the months and years ahead.
The Payment Services Directive 2 or PSD2 has been in full force for more than six months, and its impact is being felt not just in the European Union, but across the globe – with several markets, such as Singapore, Australia, and Nigeria, as well as Hong Kong announcing open banking initiatives inspired by the PSD2