Hongkongers who shop on Taobao had various payment tools such as AlipayHK, Octopus, PPS, JETCO and credit cards to settle their transactions.
But from the start of this year, they can only use AlipayHK, PPS and credit cards under the new rules issued by the People’s Bank of China.
The PBoC has said all reserve funds of third-party payment platforms must be deposited with the central bank from Jan. 14. Payment platforms will be required to close out individual accounts for reserve funds by the same date.
All funds of third-party payment firms have to go through China’s Unionpay or NetsUnion Clearing Corporation.
Octopus and JETCO probably were not going through the two designated organizations in executing cross-border payments.
They need to build proper channels before they can be used to execute Taobao transactions again.
The issue has stoked concerns that stored value facility or SVF licenses issued by the Hong Kong Monetary Authority are not recognized on the mainland.
If all cross-border transactions have to go through Union Pay or NetsUnion Clearing, the cost would be eventually passed on to consumers.
The HKMA should negotiate with relevant Chinese authorities so that HK-based payment tools are recognized on the mainland.
This article appeared in the Hong Kong Economic Journal on Jan 7
Translation by Julie Zhu
[Chinese version 中文版]
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