Reported Internet finance rules perturb Chinese public

From a TV commentator's rant against netizen's favorite financial product to looming regulatory measures, Internet finance has remained in China's headlines for months.

The online shopping boom has precipitated a scramble by e-commerce leaders like Alibaba and Tencent to give customers a quick and convenient way to pay. Online payment systems have resulted in spinoffs of almost anything from cheap cab fares to so-called "wealth management".

While a maximum of 3.3 percent is available annually on bank deposits, Alibaba's Yu'ebao and its ilk are offering nearly 6 percent and promise users flexibility, including capital transfer or withdrawal at any time without losing any interest. The services cost nothing, another feature that conventional banks cannot match. Such hidden treasures catapulted the Yu'ebao user base to over 81 million in just nine months, with around 500 billion yuan (81 billion U.S. dollars) flowing through the system.

Such large scale developments have not gone unnoticed by the banks, and their ire is rising as the new comers are eating away at bank profits and challenging the old norms. Authorities are also on the alert and claim there will be no ban on web products like Yu'ebao, but the regulatory regime will be strengthened to ensure "healthy" growth.

The comparatively benign attitude of financial authorities seems to have swung around somewhat, and authorities are now adopting a more circumspect tone. The People's Bank of China (PBoC), China's central bank, issued a notice last week suspending Tencent and Alibaba's planned virtual credit cards and payments via code scanning over "security" concerns.

On Tuesday, reports went that the PBoC released another draft regulation specifically controlling capital transfer and consumption through third-party online services.

The new rule states that transfers should not exceed 1,000 yuan per transaction - a bit more than 160 U.S. dollars - and there will be an annual limit on transactions of 10,000 yuan. Payment of more than 5,000 yuan in a single deal will not be allowed, with monthly accumulative consumption payment not exceeding 10,000 yuan. However, such reported regulations are yet to be confirmed by the central bank.

The reports drew instant criticism, as well as deep concerns about the central bank's true motives.

A netizen under the screen name of "Crazy Phillips" said that, if implemented, the new rules will not only hit online spending, but they are likely to infuriate the public.