China's top securities authority said Friday that a new investment service being offered through Alibaba's online payment platform, Alipay, was not fully compliant with relevant regulations.
When companies offer ground-breaking services, regulators need to do more than just criticize and point out shortcomings - they should provide help and encouragement as well.
One of the most eye-catching features of Alipay's service is that users can accrue interest on the money in their accounts which can be spent or transferred into physical cash at any time. In this sense, the service functions like a traditional bank deposit account, although Alipay's interest rates are much higher.
Alibaba's massive user base means that retail banks may soon have to respond with improved services and products to keep depositors from jumping ship. Industry regulators should simplify formalities and cut administrative red tape to promote this sort of healthy competition.
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