The establishment of a centralized clearinghouse for online payments suggests that Beijing is tightening its supervision over third-party payments as part of efforts to uphold financial stability in the country.

Under a regulation released this week by the People’s Bank of China, the central bank, third-party payment firms have to connect to the new platform by Oct 15 and channel all their payments through it by June 30. Presently, such firms are directly linked to banks for de facto interbank payment.

The new regulation will help rein in “systematic risks” in the financial system and remove the hurdles between banks and all types of payment firms, said Mu Haijie, senior vice-president of China PnR, a payment provider based in Shanghai that holds a 1.18 percent interest in the new venture.

“The channel will lower costs and raise efficiency by offering unified access to all banks. We welcome the move and are in the process of getting connected to the new platform,” she said.

The reform also could effectively prevent illegal activities such as money laundering, which in turn translates to a more secure online payment environment for customers, said Wang Pengbo, an analyst at Beijing-based consultancy Analysys. Wang said no change in user experience is expected.

The Online Settlement Platform for Non-Bank Payment Institutions, the clearinghouse, is owned by a number of major institutions. Seven units under the auspices of the People’s Bank of China have a 37 percent stake while Alibaba affiliate Ant Financial and Tencent’s Tenpay each own 9.6 percent. The remaining shares are owned by 36 smaller online players, including UnionPay.

The central government has in the past few months sought to place greater accountability on regulators to safeguard financial stability, as exemplified by its announcement in July that it would establish a committee under the State Council, China’s Cabinet, to improve regulation effectiveness on financial matters.

Having payment firms route their transactions through this centralized platform is likely to undercut the dominance of tech giants like Alibaba and Tencent whose bilateral settlement model with banks bypasses the central bank’s monitor, making it difficult to track capital flow, industry observers said.

In fact, the central bank has already instructed Ant Financial to drop the use of the term “cashless society” in its massive marketing campaign to promote its payment service.

The central bank told China Daily that it has not given Ant Financial detailed guidelines regarding the improvement of regulation effectiveness. However, the company has already made changes to its operations, including the addition of cash payment points at Hema Xiansheng, an Alibaba-invested fresh produce chain where all transactions could previously only be made using Alipay.

Ant Financial and Tencent, which according to iResearch make up the lion’s share of China’s 22.7 trillion ($3.4 trillion) mobile payment market, have just completed a weeklong battle in which they dished out generous incentives to lure users to their payment systems.

Ant said in a statement that it will comply with the requirements of the central bank. Tencent said it will cooperate with regulators and other relevant parties to build a justified, fair and source-sharing platform for a nonbank payment network.

“Online payments generate a significant amount of data that payment firms can use to their benefit,” said Shaun Rein, managing director of China Market Research Group.

“The government should really step up to limit their power and ensure financial security.”