China’s two mobile payments giants, Alipay and Tencent, are poised to lose about $1bn in combined annual revenue to a new central bank requirement that third-party payment groups hold all customer funds in reserve.

Chinese mobile payment transactions hit Rmb109tn ($16tn) last year, according to research firm Analysys Mason, as consumers switched from cash to smartphones for supermarkets, taxis, and payments to friends. The platforms are also increasingly used to purchase mutual funds, peer-to-peer loans and other wealth management products.

Ant Financial’s Alipay and Tencent’s WeChat Pay dominate the sector, with market shares of 54 per cent and 39 per cent respectively in the first quarter. Ant Financial is the finance affiliate of Alibaba. Together the two groups control hundreds of billions of renminbi in customer funds that accumulate on their platforms when users receive payments but do not immediately shift the funds to a bank account or investment.