China to begin cracking down on QR code payments next year

Static QR codes are vulnerable to fraud, says the PBOC

Attention all QR code shoppers! China is introducing new regulations next year that could change the way that you and everyone else buys things in the country — at least a little bit.

In recent years, mobile payments have exploded in China to the point where you are now surprised when you see someone actually trying to pay with cash. One big part of this is scannable QR codes posted on counters, windows, and tabletops by small shops, vendors, and restaurants which allow users to conveniently pay for their purchases without being weighed down by a wallet.

On Wednesday, the People’s Bank of China announced new regulations targeted at this popular payment method, which the bank says is vulnerable to fraud, money laundering, and other nefarious practices, as well as limited market competition.

Starting on April 1st, a single static QR code will only be able to receive 500 yuan from an individual in a single day. This cap can be raised once the institution accepting the payment passes security checks, receives proper permits, or just simply switches over to specialized point-of-sale terminals that create a new code for each transaction, making the process more secure.

Similarly, those paying via QR code will be capped at spending 1,000 yuan a day via the method until they pass certain security procedures.

Considering the incredible popularity of this payment method and the insane amounts of renminbi involved, it’s really only surprising that China has not made rules imposing more order sooner. While most payments made through static barcodes are small, China’s central bank argues that the barcodes can be reproduced by criminals and linked up to unknown sources, allowing them to intercept payments.

According to the Financial Times, both Alipay and WeChat have voiced their support for these regulations, with one analyst believing that it will only strengthen China’s mobile payment ecosystem in the long run by compelling more businesses to switch from static QR codes to POS terminals.

Btw, for a glimpse at just how big China’s mobile payment economy is, take a look at this FT chart below.

[Images via Caixin / Financial Times]