5 - Mobile Payment

Summary

China has become one of the leaders in the global mobile payment market in terms of market volume, growth rate and innovation capability. This can be attributed to a number of enabling factors, including technological advancement in China, mobile payment’s competitive advantages and its wide acceptance by the Chinese people. Mobile payment brings significant benefits as well as various risks and thus should be regulated in a way that reaps its benefits while containing the risks. Over the past decade, China has gradually established a regulatory regime which is composed of various rules issued by different regulators in a piecemeal manner. China’s regulatory regime for mobile payment has several key elements, such as the entry and exit mechanism, management of customer reserves, anti-money laundering measures and consumer protection. The Chinese regulation has strengths and shortcomings, particularly in relation to the overall structure and approach of the regulation. There is also a need to address the negative effects on competition in the mobile payment market that may be brought by the high entry threshold and the centralized clearing mechanism.