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Dec. 13 (NBD) – Pinduoduo (NASDAQ: PDD), a Tencent-backed e-commerce platform, is accused of conducting unlicensed payment services. 

A vendor on Pinduoduo's platform claimed Monday on social media that after reporting to the Shanghai Branch of the People's Bank of China about Pinduoduo's unlicensed payment services, he/she received affirmative answer from the bank. 

As the vendor revealed, the Shanghai Branch responded that in 2017, relevant departments investigated Shanghai Xunmeng Information Technology Co., Ltd., Pinduoduo's parent company, and they found that the company is conducting unlicensed payment service. Authorities has ordered the company to rectify and reform and the company is now under such process, according to the reply of the Shanghai Branch.

With regard to the accusation, Pinduoduo responded that it had reached an agreement with Ping An Bank, which is qualified for clearing, settlement and payment, at the beginning of 2017 to deal with the capital flow on its platform, after it received instructions and suggestions from the Shanghai Branch, and under no circumstances will Pinduoduo handle the transactional capital on its own.

The e-commerce firm also claimed that the informant who sold fake products aims to evade legal and commercial sanction by mixing up normal clearing and settlement practices in the online-to-offline (O2O) industry with his or her illegal action of selling counterfeit commodities.

The case has again drawn public attention to the clearing- and settlement-related issue in the O2O e-commerce sector. According to an industry insider, the problem Pinduoduo faces is a long-standing issue in this industry.

Before Pinduoduo's case, e-commerce titans like JD.com and Meituan-Dianping were also once tangled in the same situation.

There are two solutions to solve the problem, Wang Pengbo, an analyst with research institute Analysys, explained that one is to partner with licensed banks and third-party payment organizations and ask them to do the job, and the other is to purchase a license.

Currently mainstream e-commerce firms have already set up their own third-party payment platforms. 

In August this year, media reported that Pinduoduo bought stakes in a third-party payment service provider Shanghai Fufeitong Information Technology citing some sources but the sources didn't reveal the details.

Liu Jiehao, an analyst with iiMedia Research, told the 21st Century Business Herald that Pinduoduo will gain a bigger say in the e-commerce industry if the company acquires a license for providing payment services.

Liu also noted that unlicensed payment services pose great potential risks for the safety of capitals as well as rights and benefits of sellers and buyers, and e-commerce firms should be far-sighted in this respect. 

In the future, Pinduoduo will make larger efforts in the payment segment, Liu predicted.

Email: wenqiao@nbd.com.cn