The People's Bank of China (PBOC) has released a regulation proposing to limit the amount of transactions people can make daily through the country's 270 third-party online money transfer services. The new regulation seeks to limit daily transactions to as little as 1,000 Yuan ($160.97) depending on the level of security measures implemented by the company.

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The central bank announced the proposed regulation on Friday saying it will protect consumers' money and security details from being exploited.

The proposal has been opened to public debate. Officials have set Aug. 28 as the deadline for public feedback on the proposed regulation.

If the law is enacted, it could have a severe impact on China's booming online third-party payments system - worth about 8 trillion yuan.

The regulation could negatively affect small companies as many people would be forced to patronize state-run financial services or major industry players (like Tencent and Alibaba).

The draft regulation proposes a limit of 5,000 yuan ($800) per user for third-party transfer platforms who don't use any identification verification system. While transfer services operating with less than two security measures will be limited to 1,000 yuan ($160) transactions daily.

Online payment providers who implement the use of signatures or digital certificates in their transactions will not be affected by the regulation. Additionally, Internet banking transfers and transactions are exempted from these restrictions.

The proposed regulation seeks to open the industry to more competition and also promote the patronization of state-owned banks.

According to a Barclays report, the regulation aims at increasing government control of small third-party payment services. It will ensure third-party payment services handle only small transactions while large transfers are managed by banks.

"The proposal is aimed at having better controls and governance of third-party online payment channels...it is not targeted at controlling online shopping," the report said.

The central bank announced on Saturday that consumers can use Internet banking if they wish to make transactions worth over 5,000 yuan daily.

People with limited 'consumption accounts' would be permitted to spend less than 100,000 yuan yearly through online third-party payment operators. However, people with 'comprehensive accounts' can spend about 200,000 yuan.

The regulation also seeks to prevent online third-party payment outfits from providing users with loans, deposits and currency exchange services.

Several small start-up such as Yuebao and Huabei - both owned by Alibaba - would be affected by the regulation.

TagsPeople's Bank of China (PBOC), China Online Transaction Limit, China Online Banking, China Online Money Transfer, China Bank Online Transfer, Internet Banking China, China Bank Internet Banking