August 4th, Central Bank of China (Chinese government) announced the launch of its clearinghouse. The clearinghouse here is used as a financial tool for the central bank to check transactions between banks to the third party platforms.
August 4th, Central Bank of China (Chinese government) announced the launch of its clearinghouse. The clearinghouse here is used as a financial tool for the central bank to check transactions between banks to the third party platforms. The third party platforms like WeChat Pay, Alipay, JD Pay start to connect to the clearinghouse and request to finish before October 15th, 2017.
Tech giants are forced to share users’ money transfer records to the Chinese government. Jack Ma was too shocked to respond, Pony (WeChat’s big boss) only could keep silent, the news is overwhelming on media.
From the perspective of the Chinese government, the third party platforms are kind of a loophole to check money transfer.
How are Transactions Between WeChat and Banks?
The transaction between banks and banks are different from that between WeChat and banks.
The photo above is the process of money transfer between banks.
Currently, transferring money through WeChat Pay is not under monitored by the Chinese government.
The photo above is the process of money transfer between banks and WeChat.
A Big Loophole Here:
If you connect a bank card to WeChat, the money deducting from your account in Bank A is to WeChat’s company account in bank A. This procedure is still under monitoring.
But the real money transfer from WeChat company account in bank A to that in bank B may not exist.
So, for the government, they have no clues for where the money goes. Now it’s time to make up the loophole, the launch of the clearinghouse achieves it.
The Launch of Clearinghouse
The photo above is the process of money transfer from between banks and WeChat after the launch of the clearinghouse.
What’s That Meaning?
Imagining, you get up in the morning to order a taxi from DiDi, stop by McDonald’s to buy a breakfast. After the whole morning’s work, you use phone apps to get a lunch…
As long as you pay by Wechat, your consuming record will go into the government financial system through the clearinghouse. They know where you been, how much you spent, what you bought.
The government knows your consuming habits, as you use the passport to active WeChat Pay, any bad records happens on WeChat they can trace to you. Also, many people expected the withdraw fees from WeChat will get increased.
Consuming data can be checked by tracing money transfer records, but the government will not be so bored to check you unless you break the law.
In the past, because of the direct connection between Wechat Pay and the commercial banks. Illegal behaviors happened occasionally, like smuggling, money laundering, money transfer through the underground banks etc.
But it’s unnecessary for normal people to overreact about the clearinghouse. It just broke the hearts of Jack Ma and Pony, they have to be more selfless and generous to share millions of users’ data to the government.
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