New regulations take a tough stance on online lending. Will you no longer fear playing on your phone and accidentally racking up huge debts?

Ask AI · How will the new regulation No. 9 change the profit model of online lending platforms?

Recently, according to reports in the media about the round of layoffs in the financial services for consumers, inclusive finance, and lending-assistance industries under the impact of “Regulation No. 9,” it has drawn widespread attention online. A table that is said to have leaked shows that a certain company surnamed Shu layoffs about 30%, a certain company surnamed Ma’s consumer technology team shrank from more than 3,000 people to about 200, a certain company surnamed Du laid off about 10% and paused borrowing services for some business lines, and a certain Fortune Technology laid off nearly 20% and chose to expand overseas against the trend. These once extremely active online lending companies now have clouds of layoffs and contraction hanging over them.

Together with the “Notice on the Administration of Internet Lending-Assist Business by Commercial Banks,” officially promulgated in October 2025—namely Regulation No. 9, which everyone in the industry talks about with fear—this development has not surprised many people. Some media commentary claims that in 2020, when P2P was fully cleared, that was the first death of the online lending industry. The full implementation of Regulation No. 9 in September 2026 will be the complete end of this industry.

What exactly is the relationship between P2P and online lending?

Around twenty years ago, when the internet was just starting to take off, online lending already existed. They came with the halo of inclusive finance, filling the gap left by bank credit being too strict in terms of qualifications and ordinary enterprises and users finding it hard to get loans. They truly provided relatively convenient financing channels for small and micro enterprises and individual users and, to a certain extent, promoted economic development.

Capital is profit-seeking. Around 2010, online lending developed into the P2P model, of course under the gimmick of “high returns, low entry barriers,” forming a terrifying scale, and countless platforms sprang up like mushrooms after rain. Paipaidai, founded in 2007, was the first pure online P2P platform in China. Around the same time, companies such as Yixin, which started with a combination of offline and online models, also got going. At that time, the industry scale was small, there was a regulatory vacuum, and many companies operated in gray areas.

From 2013 to 2015 was the brutal growth period of the P2P model. By the end of 2015, the number of P2P platforms surged from a few hundred to 3,433. Originally, the core of P2P was to match lenders and borrowers directly through an internet platform—at least in theory, it functioned as an information intermediary rather than a credit intermediary. Its essence was decentralized direct lending. The operating process was: the borrower publishes borrowing needs → the platform reviews → lenders bid → funds are transferred → the borrower repays → the platform charges a service fee. At first, the platform only matched information, performed risk control review, and handled post-loan management. It did not touch the funds, did not engage in self-funding, and did not provide guarantees.

Later, the model gradually changed for the worse. Many platforms built fund pools, engaged in self-funding, and offered rigid redemption, along with mismatches in terms/tenors—deviating from being an information intermediary. Among them, Weshare rent was the most typical example. By the time Weshare rent blew up in 2015, the amount involved exceeded 50 billion yuan, involving more than 900,000 investors. In the end, the Weshare rent case was classified as a major criminal case of illegal fundraising. The actual controller Ding Ning and Ding Dian were sentenced to life imprisonment without parole; the other 24 people received sentences ranging from 3 to 15 years.

The blow-up of Weshare rent triggered regulatory vigilance. After that, a wave of P2P blow-ups swept across the country. Endless families lost their life savings, and young people fell into the abyss of borrowing to repay borrowing. After the “Opinions on Doing a Good Job in the Categorized Disposal of Online Lending Institutions and Risk Prevention Work” issued in December 2018 (Jiao Zheng Ban Han [2018] 175), P2P institutions were comprehensively cleared out.

Financial analyst Wen Bin believes that P2P is very similar to a Ponzi scheme: “P2P originally was an information intermediary; theoretically, it was compliant. Later, it turned from an information intermediary into a credit intermediary and a funds intermediary, so it took on the risks of banks but without banks’ risk controls and capital. The borrowers’ investment time is generally 3 months to half a year, while the borrowers’ loan term is 1 to 3 years. The platform can only use new money to repay old money. Once a run on withdrawals happens, it collapses immediately.”

Lending-assist models and licensed online micro-lending

After P2P was cleared out, some capital did not stop there. After P2P fell, lending-assist models and licensed online micro-lending quickly took over and became the new “masks” of the online lending industry. Different from the earlier P2P, after regulators cleared P2P, the industry was thoroughly rebuilt into a new compliance form. The two are completely different in terms of entities, funds, risk control, regulation, and the nature of risks. Now online lending is a new species. Compared with P2P that had no license, no strong regulation, and no capital constraints, the current mainstream online lending is operated self-managed by licensed institutions. Having a license is a hard requirement, and they must have paid-in capital and be subject to strict regulation. The core changes are to eliminate P2P, eliminate fund pools, eliminate rigid redemption, and eliminate self-funding—returning to a formal financial track of licensed institutions + backed by capital + strong risk controls.

In real-world operation, the logic of the online lending model is simple and direct. The online lending platform holds traffic and user data, finds smaller banks to provide the money, the platform handles customer acquisition, risk control, and collections, while the bank enjoys the interest-share split. On the surface, the platform takes a technology service fee and does not bear credit risk, so it is compliant and legal.

According to reports from multiple media outlets, partners for platforms like this are generally small and medium-sized banks. These banks’ independent risk-control capabilities are relatively weaker. To obtain enough customers, they outsource the core parts of credit approval and risk management and control, essentially turning themselves into pure wholesale fund providers. Especially during the pandemic, demand for private lending was strong. As a result, within just a few years, the market size of online lending quickly surpassed 1 trillion yuan. Through all kinds of names such as membership fees, service fees, and guarantee fees, the platforms pushed the actual annualized interest rate up to 30% or even 50% or more, forming de facto usury.

These platforms usually command huge traffic. Many users may run into borrowing pop-ups for loans reaching tens of thousands of yuan at any time while using e-commerce apps and scrolling short videos. Many people unknowingly became their users, taking on debt far beyond their own repayment ability.

On the surface, the current online lending platforms are quite standard, with full-chain regulation covering licensed entry, capital constraints, interest rate caps, funds custody, compliant collections, and data protection. In reality, the situation is more complicated: many online lending platforms’ interest rates exceed the red line, with综合 annualized returns over 24%, and sometimes reaching over 50%. At the same time, violent collections are extremely common, even inducing “borrowing to repay borrowing” and multi-borrowing, which leads users to over-borrow and makes it impossible to repay their loans.

Regulation No. 9 is a heavy punch

On April 3, 2025, the National Financial Regulatory Administration issued the “Notice on Strengthening the Administration of Internet Lending-Assist Business by Commercial Banks and Improving the Quality and Effectiveness of Financial Services,” namely Jin Gui [2025] No. 9, commonly abbreviated as Regulation No. 9. It was officially implemented on October 1, 2025, and is described in the industry as “the strictest reform in the history of online lending regulation.” It is not just tightening—its aim is to rebuild the lending-assist model from the underlying logic, with far-reaching effects on banks, platforms, and borrowers, directly reshaping the industry landscape.

The core points of the new rules are that banks must conduct risk control independently, with a cap on the comprehensive cost at 24%, platforms may not charge borrowers, and head office white-list management must be used. It comprehensively blocks the gray model of “banks provide the funds, platforms do risk control, and high-interest charges are collected.” Banks must carry out their own credit granting approval and risk evaluation, and outsourcing the core risk-control link is strictly prohibited. Banks’ funds are comprehensively withdrawn; smaller platforms lose their partnership eligibility, and the industry’s supply of funds decreases significantly. Once banks do risk control independently, smaller platforms will be “cut off from food,” which is a huge blow to them.

Under Regulation No. 9, the old model that smaller platforms previously played through “low interest + high fees” and achieved actual annualized returns of 30%–50% is completely shut down. At the same time, platform profits are greatly compressed, and high-risk, high-interest-rate customer groups are batch removed. The industry shifts from “making money on high interest” to “making thinner margins and pushing volume,” and the profit logic will change completely. The previous main sources of income—charging borrowers membership fees, review fees, and service fees—are cut off. Platforms can only earn service fees from banks. Profits become as thin as paper; platforms with pure traffic and no risk-control ability directly lose the basis for survival. With this, the industry accelerates differentiation: only leading licensed platforms with risk-control capabilities can remain on bank white lists, while smaller platforms are batch cleared out. This is also the fundamental reason why many platforms have no choice but to lay off staff.

The full implementation of Regulation No. 9 is a double-edged sword for banks, platforms, and users. Risk returns to banks. Banks with strong risk-control capabilities gain greater advantage and can also obtain more profit. Smaller banks with weaker risk-control capabilities are forced to exit or significantly contract, and the scale of internet loans drops noticeably. For platforms, those that are licensed, have strong risk control, and have bank resources transition into compliant technology service providers, with increased market share. Those smaller platforms without licenses, without risk control, and without white lists—which account for more than 90%—will be pushed out in batches, and the industry will accelerate into clearing out. With the comprehensive cost capped at 24%, hidden charges are cleaned up, and the space for usury is compressed. It seems beneficial to borrowers, but in practice disbursements will be stricter, loan amounts lower, and interest rates more uniform. Some borrowers with generally average or poor credit/qualification may not be able to get loans.

Under strict supervision, the industry has already quickly entered a phase of survival-of-the-fittest, eliminating the worse and keeping the better. Leading platforms begin shrinking their balance sheets to control risk, and profits come under pressure. For example, a certain Fortune Technology’s light-asset loan scale in the third quarter of 2025 fell year over year by 23%, and its net profit decreased by more than two tenths; multiple organizations such as a certain also, a certain win, and a certain silver saw their matching volumes continue to shrink. Personnel optimization is generally being rolled out; the proportion of layoffs at institutions is mostly in the 10%–20% range.

Regulation No. 9 is the life-or-death line for the online lending industry. It completely ends the brutal model of the past—high interest, outsourced risk control, and disorderly charging—and drives the industry to move from gray lending-assist to a formal financial track of licensed, compliant, light service, and strong risk control. Many smaller platforms are knocked out, industry concentration increases substantially, and the thresholds for borrowers to obtain financing decline in terms of cost and increase in barriers.

This article is an original BT Finance piece. Without permission, it may not be used, copied, disseminated, or adapted in any way. If it constitutes infringement, legal responsibility will be pursued.

Author | Wuji

Author statement: Content cited from media outside the site