Banks Hit Back At Alibaba

Alipay denies ICBC’s quick transfer accusation
Alipay, Alibaba Group's third-party online payment service provider, refuted Tuesday an accusation from Industrial and Commercial Bank of -China (ICBC) that Alipay's quick transfer service is "illegal."

ICBC said it lowered the upper limit of Alipay's quick transfer service in accordance with a regulation released by China Banking Regulatory Commission (CBRC) in 2011, the 21st Century Business Herald newspaper reported Tuesday.

Later on the same day, ICBC announced that it has closed service interfaces between Alipay's quick transfer service and ICBC's branches except one with ICBC's provincial branch in East China's Zhejiang Pro-vince, news portal sina.com reported Tuesday.

ICBC said the interface reduction is to avoid potential management risks and it has no impact on quick transfer "if Alipay cooperates with ICBC," according to the report.

But an independent analyst of online payment who declined to be named told the Global Times Tuesday that the reduction means new users outside Zhejiang Province cannot link new bank cards to Alipay's quick transfer service.

China's ICBC clamps down on Alibaba finance arm
Industrial and Commercial Bank of China Ltd (ICBC) will restrict trade with Alibaba's online payment arm to one branch, the bank said on Tuesday, in the country's latest crackdown on a nascent online finance industry.

Alibaba Group Holding Ltd's payment arm, Alipay, previously had contracts with numerous branches of ICBC for negotiated corporate deposits, and could place deposits with the branch offering the highest yield.

Tuesday's move means ICBC branches will no longer compete to offer high yields on Alipay's deposits, hitting the online payment business's revenues from interest, and potentially setting a precedent for other banks to follow.

The clash between entrenched interests in China's traditional finance sector and its internet companies has escalated in recent weeks, with banks imposing limits on how much their customers can transfer to online finance services and the authorities looking into potentially heavy regulation.

.......Banks, including ICBC, Bank of China Ltd, Agricultural Bank of China Ltd and China Construction Bank Corp, have restricted how much their customers can spend on Alibaba's and Tencent's online payment services.

Wealth management products, offered by Alipay, Tencent and Baidu Inc, can offer almost double the interest rate that China's traditional banks give depositors.

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