China has proposed a new regulation that could force Internet companies such as Alibaba, Tencent and Baidu to offer their online payment solutions to rivals.
“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,” said a draft regulations posted on the People’s Bank of China website.
The move could shake up the Chinese online payment market. If Alipay is offered on rival websites, people could opt to pay by it, as it’s already the largest online payment gateway in China.
Further, Alipay might lose some transactions if rival Tencent’s payment solution is offered on Alibaba websites. The move could spark off an innovation war in the payment space as the biggest differentiator between payment solutions currently is the services they are affiliated to.
Moreover, Payment solutions are growing fast in China, as people use them to pay of taxis, meals and goods at brick and mortar stores. The Chinese central bank is now seeking external opinions on the proposal.