Chinese government-backed bank card association, UnionPay, has imposed monetary penalties against payment companies for their illegal operations, following an order from the People’s Bank of China.
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An industry source with knowledge of the matter was quoted by the english.caixin.com as saying that all payment companies fined had to pay a total of more than RMB50m ($8.08m) a month.
China PnR, 99Bill and YeePay were each fined more than RMB10m ($1.61m) in one month.
According to the publication, UnionPay found that the payment firms are charging less than the agreed-upon fees to attract users.
The four standards set by the country’s top economic planner include 1.25% for catering and entertainment businesses, 0.78% for common shops and 0.38% for supermarkets and gas stations. The lowest standard is service costs charged to hospitals and schools.
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By GlobalDataThe fee collected are shared between banks (70%) and payment companies (20%) with the remaining 10% going to China UnionPay’s kitty.
One source told the publication that it is a common practice for payment companies to allow businesses to pay less than the standards; however, the China UnionPay has begun enforcing the rules and issuing fines this year.
China UMS, a subsidiary of China UnionPay, was the first to conduct the illegal operations, but it was not clear if it was fined, the source from a payment company said.
Additionally, the banks who were found to be involved in the illegal operations were also slapped hefty fines.
