China thwarts virtual credit cards

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China’s central bank has blocked plans by Tencent Holdings and an affiliate of Alibaba Group to offer virtual credit cards as the government moves to tighten restrictions on online financial products.

The suspension of virtual credit cards and so-called quick response codes was meant to regulate the internet finance industry and protect consumers, Xinhua News Agency said on Friday, citing Zhou Jinhuang, the deputy head of the People’s Bank of China’s payment and settlement department. The virtual cards would have let consumers buy goods from retail websites on credit.

Tencent is competing with Alibaba and Baidu to sell online financial products to China’s 618 million internet users. Alibaba’s affiliate and China Citic Bank planned to offer 1 million cards with a minimum credit of 200 yuan (R347) this week, and the bank was due to offer more cards with Tencent.

Li Dongrong, the deputy governor of the People’s Bank of China, said early this month that the central bank was studying ways to regulate online finance.

Shares of China Citic Bank fell 6.9 percent in Hong Kong before being halted from trade. A press officer at the bank said it had not received the notice and that it had not issued any virtual cards yet. – Bloomberg

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