The Development and Regulation of Mobile Payment: Chinese Experiences and Comparative Perspectives

Abstract

China has become one of the leaders in the global mobile payment market in terms of market volume, growth rate, and innovation capability. This can be attributed to a number of enabling factors, including technological advancement in China and mobile payment’s competitive advantages and wide acceptance by the Chinese people. Mobile payment brings significant benefits as well as various risks and thus should be regulated in a way that reaps its benefits while containing those risks. This article critically examines China’s regulatory regime for mobile payments, focusing on several key elements such as the entry and exit mechanism, management of customer reserves, anti-money laundering measures, and consumer protection. A comparative study is also conducted on the regulation of mobile payment in several major jurisdictions, including the US, the UK, Singapore, and Hong Kong. Then, this article analyses the strengths and shortcomings of the Chinese regulation and, based on international experiences, makes relevant improvement suggestions. China is advised to enact a unified law specifically for mobile payment and adopt a more nuanced risk-based approach in setting out regulatory requirements. There is a need to address the negative effects on competition in the mobile payment market that may be brought by the high entry threshold and the centralized clearing mechanism. China should also streamline the enforcement aspect of its regulatory regime and pay particular attention to important issues of consumer protection such as data protection.

Keywords: mobile payment, Fintech, consumer protection, China, comparative study

JEL Classification: K22, G23