Risk Control Mode Used By Payment Service Providers In P2P Internet Lending

With the generalization of the “Internet Plus” and the development of inclusive finance,as a supplement to traditional banking lending,P2 P internet lending is growing fast to solving the problem on loan difficulty and high cost loan for small and micro businesses and individual merchants.Since the establishment of the first P2 P internet lending platform in 2007,the industry began a rapid development from 2012.Up to the end of 2015,there is 2595 P2 P internet lending platforms in China.The high growth causes many problems such as disordered development,fraud,bad management etc.which bring adverse effects to investors,the industry even the society.How to control the risk on P2 P internet lending platform is a social problem.Under the consideration of risks self-control,Payment service providers,the main cooperator of P2 P internet lending platforms,will do their best to minimize the risks from P2 P internet lending merchants during the actual operation.The Purpose of this paper is to discuss the risk controlling effects by payment service providers in P2 P internet lending business,and to find out which risks could be controlled and relevant risk measures adopted by payment service providers.Based on theories and case analysis,this paper will point out the main risks on P2 P internet lending and analyze the causes and consequences of the risks.With the introduction of work flow on P2 P internet lending,the paper will highlight the payment role and fund trusteeship by payment service providers and affirm that payment service providers do make some risk constraints on P2 P internet lending merchants.Then the paper introduces the payment service providers take effect on relevant risk constraints and risk control measures adopted.Meanwhile,the paper will make further discussion on the limitation on risk reduction of P2 P internet lending merchants by payment service providers and explore whether there are some improvement method to payment service providers.The paper will point out banks,as the payment service providers' strong competitor,have the capacity of controlling some risks which payment service providers could not do.Contrasting the merits and drawbacks on fund custodian between banks and payment service providers,the paper discusses whether there is a kind of fund custodian plan cooperated by banks and payment service providers.Finally,the paper will propose a best fund custodian solution to protect the fund safety of P2 P internet lending platform,which called as “Bank + PSP” Fund trusteeship.Finally,the paper thinks the key point for risk control to P2 P internet lending is the government supervision,and makes some suggestions on regulatory focus.