News this week: Alibaba Group’s former subsidiary and online payment platform, Alipay, has reportedly been granted an operating license by China’s central bank – the People’s Bank of China (PBOC). The announcement, released by the PBOC, was made amid the continuing, unresolved controversy surrounding the transfer of Alipay from the Alibaba Group into a separate company controlled by Alibaba Group chairman, Jack Ma.
The first batch of third-party payment licenses was granted by the PBOC to 27 domestic Chinese operators. Operators who fail to gain the new business license from PBOC by 31st August this year will be shut down.
The PBOC issued a set of regulations in June last year governing third-party payment providers in China. A separate set of guidelines required for companies operating under foreign ownership was also issued. The PBOC-issued license gives Alipay the right to handle Internet payments, mobile transactions, prepaid card services, bank card acceptance and currency remittances.
There are reports that progress is being made in talks between Alibaba and Yahoo. There is also a Caixin report that Softbank’s president Masayoshi Son has now reportedly refused to cooperate in settlement talks. Caixin reports that the transfer of Alipay resulted in two payments to Alibaba Group shareholders valued at just US$51 million. The payments were carried out in two stages in June 2009 and August 2010.
Caixin identified the buying company as Zhejiang Alibaba E-Commerce Co., a company controlled by Alibaba Group chairman, Jack Ma. According to iResearch Consulting Group, Alipay held a 50% share in China’s RMB1.1 trillion (US$170 billion) online payments market in 2010.
CEO of Alipay, Lucy Peng, was quoted saying, “We are pleased that the People's Bank of China has given clarity to the regulatory framework of the payments industry. We will continue to serve our customers by focusing on product innovation, technology capability, and security, while ensuring full compliance with regulatory requirements.”
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