Caixin
Nov 13, 2018 07:28 PM
FINANCE

New Online Payment Clearinghouse Survives ‘Double 11’ Shopping Orgy

Workers sort packages at a logistics base Changzhou, Jiangsu province on Nov. 12. Photo: VCG
Workers sort packages at a logistics base Changzhou, Jiangsu province on Nov. 12. Photo: VCG

China’s new clearinghouse for online transactions held up well during the orgy of online shopping that takes place every Nov. 11 during Alibaba’s “Double 11” sales event.

NetsUnion Clearing Corp.’ s platform — which serves as the sole intermediary clearing of nonbank online transactions — handled 1.17 billion transactions across financial institutions on Sunday, according to its website. At its peak, it handled 92,000 transactions per second.

The online sales event, China’s biggest, served as a major test for the clearinghouse, which went live just last year to help regulators improve oversight of the country’s online payment market, the world’s largest. One of the purposes of the clearinghouse is to end a longstanding practice in which transactions from different companies were handled under different terms with banks, falling outside the central bank’s oversight. The goal now is to create a level playing field while reducing operating costs and management risks for payment companies and banks.

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Alibaba workers swap data in Hangzhou, Zhejiang province on Nov. 11. Photo: VCG

On Sunday, the clearinghouse had its work cut out for it. Alibaba Group Holding Ltd., the county’s e-commerce kingpin, touted its record 213.5 billion yuan ($30.7 billion) in gross merchandise volume, a figure that counts the revenue of total orders transacted online, during the 24-hour sales event. JD.com Inc., the industry’s second largest player, reported 159.8 billion yuan in gross merchandise volume on Sunday and the 10 preceding days.

Established in August 2017 under instructions from the central bank, NetsUnion aims to cut the direct link between third-party payment providers and banks. All payment transactions handled by third-party providers were mandated to go through the clearinghouse. To date, NetsUnion has handled over 90% of all the cross-institution transactions, the state-backed company said on its website. The clearing platform was designed to be a key element of financial infrastructure that put all of the country’s 200 or more payment companies under a standard set of clearing protocols and rules.

Contact reporter Timmy Shen (hongmingshen@caixin.com)

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