(Yicai Global) Dec. 12 -- Chinese fast-growing e-commerce platform Pinduoduo has been caught up in a spat with one of its shop owners, who recently reported the company to regulators, insisting that the issues of 'second clearing and settlement' and operating payment services without license still exist on the platform. 

In reply to these claims, Pinduoduo today clarified that the shop owner sold fake goods and was just trying to confuse the public with his so-called reporting, so as to avoid the demand for compensation proposed by the platform.

The shop owner posted the letter of opinions issued by the People's Bank of China on social media on Dec. 10, citing it as the central bank's response to his earlier claims. The letter indicated that the PBOC conducted an investigation of Pinduoduo's parent Shanghai-based Xumeng Information Technology last year, which confirmed that the firm was running the payment business without license. It urged the company to rectify its ways. 

However, the shop owner insisted that he found no changes in the platform's method of settlement, which still involved 'second clearing and settlement.'

Second clearing and settlement refers to a transaction where e-commerce platforms gain access to payment institutions and commercial banks, retain the shop owners' settlement funds and carry out the clearing and settlement process with these funds on their own. This is deemed illegal because online platforms don't have the license or qualification to operate the clearing and settlement business.

After receiving the central bank's correction missive last year, Pinduoduo announced that Ping An Bank, a subsidiary of Ping An Insurance, which is qualified for the payment, clearing and settlement business, would conduct its fund custody and settlement. The platform will not touch any funds used for transactions in the whole procedure, Pinduoduo said in reply to the shop owner's claims, China News reported today.

The shop owner was found to sell fake goods at the end of last year, Pinduoduo revealed, adding that it froze the shop's capital in accordance with their agreement and demanded that it compensate relevant customers. The dealer has refused to pay up, however, and has repeatedly reported the platform to the PBOC and other regulators. It has also put pressure on Pinduoduo by releasing relevant information and news via public opinion channels on social media in the hope of retrieving its frozen funds, the report added.

China's e-commerce sector is still at the exploration and improvement stage, so 'second clearing and settlement' is a rather universal issue, the report pointed out, adding that JD.Com, Meituan and many other platforms, in addition to Pinduoduo, have also been cited and ordered to rectify their practices.