China UnionPay, the state-backed card issuer, is working on a QR code mobile payment system, according to the Chinese media.
In March, the central bank, People’s Bank of China (PBOC), demanded that Alibaba and Tencent stop the launch of similar services.
At the time, an analyst for IResearch in Shanghai said: "The PBOC could be worried about payment risks involving QR codes."
Alibaba and Tencent were also working on virtual credit cards with China’s Citic Bank and it is thought the central bank was trying to protect China UnionPay’s revenue by banning payments that would bypass its payment network.
The IResearch analyst said: "As for the credit cards, a lot of the credit risk calculation is based on data provided by Tencent and Alibaba, so the central bank might be worried about their models."
However, it has been reported that some banks and companies, including Alibaba subsidiary Alipay, have defied the central bank by offering QR code payments and are not yet facing punitive measures.
UnionPay is in discussion with some of the country’s banks on how to promote the new service.
China UnionPay’s latest move follows on from an announcement in May that it was planning to invest nearly CNY200m ($32.02m) in expanding its payment services business on the back of growing e-payments market in the country.
China UnionPay assistant president Hu Ying was quoted by China Daily as saying the company is promoting the use of mobile devices for making payments instead of card swiping.
The mobile payment practice has created a lot of business opportunities across both online and offline payment channels, added Ying.
The card network also signed an agreement with telco China Mobile to offer NFC payment technology early this year.