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Alibaba and Tencent hit by China's new mobile payment rules

Mandate to deposit funds at central bank will slash interest income

Alipay operator Alibaba Group generates income from unused prepaid funds by collecting interest from private banks and offering loans through smartphone apps. (Photo by Koji Uema)

SHANGHAI -- Alibaba Group Holding and other mobile payment providers in China stand to lose significant interest revenue when the government requires that all prepaid funds they receive from users be deposited with the central bank rather than private institutions.

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