Supervision of online payments must not harm Internet innovation

The result of the limit will be that the Internet users will not put their funds into the online payment accounts because it will be very inconvenient. If you say the Internet financial institutions are a river, the Internet users' money is the water, so when the PBOC shuts down the floodgate in the upper stream, the worst outcome is that the river will dry up.

To legislate for online payments, the best scenario is win-win. For Internet financial enterprises, when there are rules to guide online payments, they can develop more quickly and healthily. For Internet users, the payment risks can be prevented, and the interested parties' rights and interests will be protected.

But the problem is that this only is an ideal assumption. If the rules and laws are made inappropriately, innovation will be killed and this will cause trouble for consumers and help protect monopoly interests.

Compared with banks, the non-bank payment institutions have limited security for clients. But is "security" the absolute reason to impose limits on those enterprises? We have to look at the other side of the issue. China's Internet financial innovation is very advanced, and so far there have been no big flaws or accidents. While strengthening the supervision, the administration must be true to reality, break unnecessary constraints, and consider the vitality of enterprises and the experience of consumers. For instance, consumers have to provide at least three documents to prove their identity when opening the third-party payment account. This is too cumbersome.

Innovation and supervision are a contradictory pair that are forever intertwined. As professor Debora L. Spar from Harvard Business School wrote in her book "Ruling The Waves," "Entrepreneurs such as Samuel Morse and Rupert Murdoch carve new markets from the emerging technology and proclaim that the old rules no longer apply. And for a while they are right. Pioneers plow into the world that technology has wrought, leaving governments gasping in their wake. But eventually -- and inevitably -- even cowboys realize they need rules: rules of property, rules of coordination, rules of competition. The erstwhile pioneers thus turn to the government, lobbying for order and setting the stage for the next wave of innovation."

Facing the inexorable historical rules, the regulators do not have to be timid and overcautious, and they don't necessarily have to regard regulated parties as enemies. They need rules even more than the government.

The writer is an IT industry observer.

The article was first published in Chinese and translated by Zhang Rui.