The cover article of Caijing Magazine: legislation Internet Finance

Absrtact: "Caijing" magazine cover article: legislation regulation Internet finance early spring warm. The fast-growing internet finance has been hit by a regulatory attack by China's financial authorities. On the national two sessions, which ended in mid-March, the hot debate on supporting Internet financial innovation has not yet

"Caijing" magazine cover article: Legislation Internet Finance

Early spring warm. The fast-growing internet finance has been "reversed" by China's financial authorities.

In mid-March, the end of the national "two sessions" on the support of Internet financial innovation has not dissipated, March 17, "Payment agencies network payment Business management measures (draft)" (hereinafter referred to as "draft") turned out. The draft of opinion, issued by the Payment Clearing Association to a third-party payment agency, has made strict rules for the payment of the company's business development. And in the previous three days, the People's Bank of China paid the Clearing Division issued a notice, suspended Alipay, tenpay two-dimensional code payment and virtual credit card business.

The incident suddenly, the industry alarmed. Suspension of business supervision notice, so that Alipay and Tenpay unprepared, and the cooperation of CITIC Bank shares immediately plunged. But the head of a paying company felt "both accidental and unexpected". Because of this, the voice of strengthening the Internet financial supervision has been heard, the specific supervision methods are divergent, the industry has a certain psychological preparation for the strengthening of supervision.

Behind the different viewpoints is the entanglement of the interests of all parties. Like "Balance Treasure", in the provision of High-yield wealth management products for savers, promote money market funds development at the same time, brought the commercial bank debt cost promotion. Here, the user, Alipay, Tianhong Fund, Commercial Bank interest pattern was reorganized. Financial regulators are also faced with the problem of how to regulate and how to coordinate security and innovation.

Financial reporter learned from the authoritative channels, the central bank led the drafting of the Internet financial supervision and guidance has completed two rounds of advice, if the next procedure is smooth, or is expected to be introduced in the first half.

According to the basic spirit of the drafting stage of the document, the regulatory layer divides internet finance into five aspects, such as third party payment, Peer-to-peer, public financing, Internet financial management and Internet insurance, respectively in accordance with the business model of domestic internet finance. The draft document proposes to uphold the principles of moderate supervision, classified supervision, coordinated supervision and innovation supervision.

This is only a starting point for Internet Financial regulation. At the State Council level of the Internet financial supervision before and after the introduction of the relevant departments will be the area of their own supervision to introduce relevant rules.

At the end of February, the SFC convened a meeting of all fund executives to highlight the liquidity management of money market funds and plans to introduce a draft of risk management for money market funds. The document is scheduled to be launched in mid-March but has been postponed repeatedly. And like the network to pay the "opinion draft" so that specific areas of regulatory documents, will also be produced in the negotiations. The CBRC will also introduce regulatory rules for Peer-to-peer industries.

This means that, after nearly two years of rapid growth, internet finance is beginning to be incorporated into China's financial system and regulatory framework.

Historically, the change of financial system has always been the conflict between the main interests, and finally reached a compromise process. So is the development of internet finance. For the Internet financial supervision, there may be no optimal solution or the ideal system structure, only possible to achieve a game equilibrium.

At present, the game is underway, the outcome is still variable, but regulation and norms are inevitable.

The initial construction of supervision system

The guidance of Internet Financial Regulation was drafted by the Central Bank Law Division, and the first two rounds of feedback are now over and the central bank is revising accordingly. Official documents are likely to be launched in the first half

The general view in the industry is that internet finance is a new financial model based on large data and cloud computing as a resource. Internet finance has greatly reduced the cost of financial services, but also expanded the financial services of the crowd.

The domestic Internet financial craze began in 2012, and the following 2013 years were called "the first year of internet finance". To "balance treasure" as the representative of the Internet financial products, in the public sought after, but also caused the attention of the regulatory layer.

With the continuous innovation of related business, the domestic internet finance does face a certain degree of regulatory and legal vacuum. The 2013 State Council report on the work of the Government, to promote the sound development of internet finance, improve the coordination mechanism of financial supervision.

The investigation of Internet finance by relevant departments has been started since last year. Caijing Reporter learned from the authoritative channels, the relevant department of the People's Bank of China began to study internet finance in 2013, and in December 2013 to the State Council submitted a 90-page investigation report, but also reported on the Internet financial supervision and guidance of the draft.

It is reported that the guidance of the Internet financial supervision by the Central Bank Law Division led the drafting, participate in the discussion and signed departments include: Ministry of Information Technology department, the Ministry of Finance, the Financial Secretary, the CBRC Innovation department, the Securities and Futures Commission Agency fund Department, the CIRC Development and reform department and other departments. In accordance with the procedures used to introduce documents, involving a number of ministries to draft documents, after the lead department to complete the draft, will be submitted to other departments for the signing, and to provide feedback. For now, the first two rounds of feedback have ended and the central bank is revising accordingly. Official documents are likely to be introduced in the first half of the year.

According to the current development of internet finance in China, the guiding opinion is to divide the Internet financial model into Third-party payment, peer-to-peer, public financing, internet finance and Internet insurance, and to make principled provisions in the corresponding fields. Specific rules for these areas are issued by the corresponding regulatory authorities. For example, the Securities and Futures Commission will soon introduce a corresponding specification for the money market funds that sell online.

As for the regulation of Internet finance, the guiding opinions will be on the principles of moderate supervision, classified supervision, coordinated supervision and innovation supervision. The responsible person in charge of the above payments said that moderate regulation embodies the inclusion of Internet financial development.

Liu, deputy Governor of Central bank, in February 2014, wrote in the "Tsinghua Financial Review" that the Internet financial supervision adhering to the concept of inclusiveness and innovation, he used "try to burn 3rd full" to describe "to encourage the Internet financial innovation and development, tolerance mistakes, for the industry to reserve a certain space" principle of supervision

The principle of classified regulation is to hope that the various regulatory departments can play their own professional. According to the "financial" reporter understand, has been basically determined peer-to-peer by the CBRC supervision, the Securities and Futures Commission supervision by the SFC, before this, the Third-party payment has been centralized people's bank supervision.

Taking the SFC as an example, in order to better co-ordinate the Internet financial Regulation, the SFC has drawn up a group of "Clearing House" special Division Internet Finance related issues from the departments of agencies, funds and futures departments.

The current division of China's financial regulatory system will also create problems: the scope of internet finance is often across multiple regulatory areas, such as the regulation of "balance treasure" involving the central bank and the SFC, which requires regulatory co-ordination.

March 18, Caihongbo, president of China Society for payment and liquidation, proposed in China's high-level forum on payment system development to combine institutional and functional regulation to strengthen coordination among regulators in market access, risk reserve provisioning, cross-border and cross-border Internet financial sector regulation. Regulators have reached a consensus, he said.

Although not expressly included, functional regulation has been called for by the industry. Xiaoling, deputy chairman of the National People's Congress, said at a press conference on March 8 that there are four basic functions of finance: credit creation, connection between investment and financing, third party financing, and economic compensation for the injured by the law of large numbers. These basic functions are not fundamentally altered by the intervention of the Internet.

The internet is the means to realize financial function. Take Alipay as an example, if the payment business, it is the people's bank supervision, but if the payment account and money market fund accounts linked to make "balance treasure", it will be regulated by the SFC.

The principle of innovation regulation means that it should be adjusted to the characteristics of Internet finance in addition to the traditional supervision mode. For example, in the online payment of the "opinion draft" incident, some industry insiders believe that the regulator still follows the traditional line of supervision thinking to consider the supervision of online payment, ignoring the mobile Internet development background offline and online convergence trend.

The innovation regulation also means that the industry self-discipline organization should play a role. The Payment Clearing Association is a good buffer between the regulator and the payment company, and some non-emergency, marketable issues can be handed over to the association for negotiation and self-discipline under market dominance. In his view, only regulators are acutely aware of this to make the association work.

In addition to the Pay Clearing Association, the Central Bank Law Division is leading the establishment of the Internet Finance Association, which will become a national independent association, the central bank hopes to play a certain role in the industry self-discipline.

Third party payments: tighter supervision

Suspension is not to stop, the industry generally expected that the above business will have a certain security under the premise of reopening, but the specific restart time is currently uncertain

On the morning of March 14, a letter about the suspension of payment of the company's offline barcode (two-dimensional code) payment and other business advice spread quickly. There are two core content: one is to suspend the two-dimensional code payment business, and the second is to suspend the virtual credit card. Zhou Jinhuang, deputy director of the central bank's payment and clearing division, confirmed in an interview with Xinhua that the central bank did issue this notice.

Suspended notice makes Alipay and Tenpay unprepared. Citic Bank, which works with both of the virtual credit card projects, has experienced sharp swings in its share price.

The reason for the suspension of these two operations, the central bank in a small media conference held on March 19, said that the suspension of two-dimensional code business is mainly from the point of view of payment security, while the suspension of virtual credit card mainly violates the "three witness" principle. The so-called "three witnessing" principle means that when a user applies for a credit card, the salesman visits the applicant's work unit, sees the applicant personally to sign, the salesman personally verifies the application data, also known as "pro-visit, close-signed, pro-core".

Suspension is not to stop, the industry generally expected that the above business will have a certain security under the premise of a new release, but the specific restart time is currently uncertain.

March 18, Caihongbo, president of the Society for payment and liquidation, said in a high-level forum on the development of China's payment system that innovation in Internet finance is flawed if it is not able to guard against greater risk. Cai believes that the two-dimensional code payment in terms of security, transaction non-repudiation and so on are still to be explored, in the relevant standard system, such as the establishment of standards can also be done.

From the technical application, the two-dimensional code payment is there any risk?

A UnionPay risk expert said, the essence of payment of Alipay bar code is to use the barcode technology such as two-dimensional code to convert the online credit card payment into the online transaction, the low risk transaction into high risk transactions. Compared with the special equipment of POS, the barcode payment equipment lacks the minimum trade information technology guarantee and has not been certified by any professional security. Payment process can not guarantee the security of trading accounts and orders, can not reflect the basic requirements of real trading scene.

The two-dimensional code does have a risk loophole and could be artificially implanted with viruses and Trojans, and the central bank has recently received feedback on a number of two-dimensional code risk cases, said the top central bankers.

People from the payment company point out that the two-dimensional code as a long-distance payment mode has been used in many countries in the world, if it is a single payment mechanism, and the formation of a closed loop, point-to-point transactions, the risk is actually very small.

On the issue of virtual credit cards, Caihongbo that the bank card face sign is the world's practice, but also the safest. Therefore, there are some problems with virtual credit cards in terms of compliance and risk requirements in the absence of a fully-real-name online account.

"Now some commercial banks have started to do virtual credit cards, banks do nothing, but third parties pay to do, the regulation will be more prudent." "said one of the state's big bank card center people.

There is no absolute security, there is no absolute risk, the tilt of the balance depends on their position. More people understand the development of events as a game of interest behind the industry. The development of two-dimensional code payment may subvert the existing pattern of online receipts, while virtual credit card will impact the credit card business of commercial banks.

Further benefit analysis helps to understand the problem. Online billing and the "two-dimensional code" as the representative of the online payment on the interests of a very different. The two follow different models and rates, the main line of payments to pay the channel, the main application is the 7:2:1 profit-sharing model. But paid online, without the UnionPay link, which makes the rate lower. At the same time, Alipay and other payment companies in cooperation with the Bank, the adoption of "alliances" method, access to a very low rate. If the two-dimensional code to pay a large number of spread out, and gradually the offline payment conversion into online payment, will be the existing receipts and benefits pattern of a larger impact.

The central bank has been cautious about the way in which receipts are received and the innovations in machinery. The central bank believes that the traditional POS system in the security still has advantages, has repeatedly asked the payment agencies in the collection of innovation, and the central bank in advance to maintain communication, and to a certain extent, the regional and offline supervision. The regulator of a pay agency says the regulation of paying companies is actually looking for a balance between security and convenience.

Another head of the pay agency said that the mobile Internet background on the offline and offline began to integrate. The regulatory body uses open and inclusive Internet thinking to understand the merged new business and to prevent systemic risk with the bottom line thinking. And can not be simply limited to the previous line of the way to hard new business, which is not in line with the trend of development, and can not really manage the risk.

The central bank's suspension of two operations is only the tip of the iceberg to pay for the tightening of corporate regulation.

On the evening of March 14, the "Payment Agency Network Payment Business management Method (draft)" Suddenly exposed, the "opinion draft" in the harsh norms again stirred the market fragile nerves.

Caijing Reporter learned that the code for the first time in the Pay clearing Association in an internal seminar was taken out with the payment agencies, in the evening of March 14 (Friday), the relevant agencies reported their views.

Among them, the most make the payment institution unbearable one stipulation is, pay the company individual to pay the account transfers the single pen not to exceed 1000 yuan, the year cumulative cannot exceed 10,000 yuan, individual single pen consumption must not exceed 5000 yuan, the month cumulative cannot exceed 10,000 yuan.

At the communication meeting, senior central Bank officials said that the "Payment agencies network payment business management measures" also need to discuss, modify and improve, will not be published in a short time. As for the amount of a single transfer of $1000, he explained that this was due to a 2013-year payment of the company's single average of 500 dollars in payment amount, which could be modified or canceled in the future.

This limit reflects the regulatory authorities ' aim to limit the business of third-party payment companies to small payments.

An expert involved in the central bank's discussions said: "The regulatory layer for financial security considerations to introduce a regulatory policy, the motivation is good, after all, the financial security is always the first line of finance, but the specific regulation is not arbitrary." Limiting the amount of transactions is not a good approach, he argues, but should be strengthened by setting some trading conditions to ensure safety.

The draft text, which has now been drafted, does not represent a final opinion. The parties will continue to consult on this. But it may not be accidental to superimpose these seemingly isolated events together.

March 18, Alipay responded that the draft was drafted, nor was it formally promulgated, nor implemented. It has fed the relevant comments to the Central bank and is actively communicating with the central bank. Alipay points out that, based on its understanding of the policy and communication with the regulatory department, Alipay quickly pays the user to purchase and redeem the balance treasure, now and in the future will not be affected.

The problem is that fast payment is the customer's bank account, if the customer directly with the bank accounts for the purchase and redemption of funds, the use of Alipay account?