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September 28, 2017

Wang'Lian: Central Clearing House for Mobile Payments in China

Mobile payment firms like Tencent & Ant Financial in China will soon have to share transaction data with their competitors. This comes as the People's Bank of China set up a new central clearing house, Wang'Lian that such firms will be forced to use.

What is Wang'Lian?

Wang'Lian means "Non Bank Internet Payment Union". It will come in to force by June 2018. This move from PBOC could give banks an advantage, as previously private proprietary transaction data is shared.

What are the Advantages & Disadvantages?

Alipay and WeChat pay are key drivers of the economy in China, having handled $15 trillion worth of transactions last year alone. They have a combined market share of around 70% of the digital payments market. The launch of Wang'Lian could put these mobile payment providers at a competitive disadvantage as banks have access to their information, which could mean serious losses for these two firms. 

There are also many smaller payment providers in china who are likely to welcome the central clearing house, as a standard fee structure would work in their favour (but not in the favour of bigger PSPs). It will also allow these smaller companies to share information for free, which could be very beneficial.

How will Wang'Lian affect consumers & merchants?

Consumers and merchants are unlikely to experience any difference to the payment process at all: the data collected by Wang'Lian will be no different to the data currently collected by Alipay or WeChat. In fact, by storing data under a standard system, the security of consumer data will be improved. In addition, it has already been confirmed that no added costs will be passed on to consumers or merchants."

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