New regulations take a tough stance against online lending, no longer afraid of playing on your phone and accidentally racking up huge debts?

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

Recently, media reports about the layoffs in the fintech, consumer finance, and loan assistance industries under the impact of the “New Regulation No. 9” have sparked widespread attention online. An alleged leaked table shows that some tech companies have cut about 30% of their staff, Ma’s consumer tech team shrank from over 3,000 to about 200, with some business lines suspending lending services, and Fu’s tech company cut nearly 20% and chose to expand overseas against the trend. These once highly active online lending companies are now shrouded in clouds of layoffs and contraction.

Combined with the “Notice on the Management of Internet Loan Assistance Business of Commercial Banks,” officially announced in October 2025, which is the industry’s dreaded No. 9 regulation. This news did not surprise many; some media opinions suggest that the full clearing of P2P in 2020 was the first death of the online lending industry. The full implementation of the No. 9 regulation in September 2026 will mark the industry’s complete end.

What is the relationship between P2P and online lending?

About twenty years ago, online lending existed when the internet was just emerging. They carried the halo of inclusive finance, filling the gap caused by banks’ high qualification requirements, making it difficult for ordinary enterprises and users to get loans, and indeed provided relatively convenient financing channels for small micro-enterprises and individuals, promoting economic development to some extent.

Capital seeks profit. Around 2010, online lending developed into the P2P model, naturally forming a terrifying scale under the guise of “high returns, low thresholds” investment and wealth management. Countless platforms emerged like mushrooms after rain. Founded in 2007, Paipaidai was the first purely online P2P platform in China, while Yixin and others started with offline + online models. At that time, the industry was small, with regulatory gaps, and many companies operated in gray areas.

From 2013 to 2015, the P2P model experienced a period of wild growth, with the number of platforms skyrocketing from a few hundred to 3,433 by the end of 2015. Originally, P2P’s core was to match lenders and borrowers directly via internet platforms, theoretically as an information intermediary, not a credit intermediary. Its essence was decentralized direct lending: borrower posts loan needs → platform reviews → lenders bid → funds transfer → borrower repays → platform charges service fees. Initially, platforms only handled information matching, risk control review, and post-loan management, without touching funds, self-funding, or guarantees.

Later, the model gradually became distorted, with many platforms engaging in fund pools, self-funding, rigid repayment, and maturity mismatches, deviating from the information intermediary. The most typical case was Rent-to-Own (租宝). By 2015, Rent-to-Own had over 50 billion yuan involved, with more than 900k investors. Its collapse was classified as major illegal fundraising, with Ding Ning and Ding Dian, the actual controllers, sentenced to life imprisonment, and 24 others sentenced to 3 to 15 years.

The Rent-to-Own collapse triggered regulatory alertness, leading to a nationwide wave of P2P defaults, with countless families losing their savings and young people falling into debt traps. After the issuance of the “Opinions on the Classification Disposal and Risk Prevention of Online Lending Institutions” (Regulatory Office Letter [2018] No. 175) in December 2018, P2P institutions were fully cleared out.

Financial analyst Wen Bin believes that P2P is very similar to a Ponzi scheme: “P2P was initially an information intermediary, which was compliant in theory. Later, it transformed into a credit and fund intermediary, bearing the risks of banks but without their risk control or capital. Borrowers’ investment periods are generally 3 to 6 months, while loan terms are 1 to 3 years. The platform can only borrow new money to pay old debts; once a run occurs, it collapses immediately.”

Loan assistance models and licensed online micro-lending

After the P2P clearing, some capital did not stop. Following the fall of P2P, the loan assistance model and licensed online micro-lenders quickly took over, becoming the new guise of online lending. Unlike previous P2P, which was unregulated and operated without licenses or strong capital constraints, the new compliant form involves licensed institutions operating independently. The core differences are in subject, funds, risk control, regulation, and risk nature. Today’s online lending is a new species. Compared to unlicensed, unregulated, and capital-unconstrained P2P, the mainstream now involves licensed institutions managing their own operations. Licensing is mandatory, with paid-in capital and strict regulation. The key changes are the removal of P2P, fund pools, rigid repayment, and self-funding, returning to a regulated financial track with licensed, capital-backed, and strong risk control.

In practice, the logic of online lending is straightforward: platforms hold traffic and user data, seek funding from small and medium banks, handle customer acquisition, risk control, and collections, while banks share in the interest. On the surface, platforms earn technical service fees, do not bear credit risk, and are compliant.

According to multiple media reports, these platforms generally cooperate with small and medium banks, which have relatively weak risk control capabilities. To attract enough customers, they outsource core credit approval and risk management, becoming pure fund wholesalers. Especially during the pandemic, demand for private lending surged, and within a few years, the market size quickly exceeded one trillion yuan. Platforms increase annualized interest rates to 30% or even 50% through membership fees, service fees, guarantee fees, and other charges, effectively creating high-interest lending.

These platforms usually control huge traffic. Many users encounter pop-up loan offers of several ten thousand yuan while shopping on e-commerce apps or watching short videos, often unknowingly becoming their customers and bearing debts far beyond their repayment capacity.

On the surface, licensed platforms with capital constraints, interest rate caps, fund custody, compliant collections, and data protection seem very legitimate. In reality, many platforms’ interest rates exceed legal limits, with annualized rates over 24%, even reaching above 50%. Violent collection practices are widespread, including inducing debt-to-debt lending and multiple borrowing, leading users into over-indebtedness and inability to repay.

No. 9 regulation is a heavy blow

On April 3, 2025, the China Banking and Insurance Regulatory Commission issued the “Notice on Strengthening the Management of Internet Loan Assistance Business of Commercial Banks to Improve Financial Service Quality,” known as Regulation No. 9. It officially took effect on October 1, 2025, and is regarded by the industry as “the strictest reform in online lending regulation history.” It is not merely tightening but fundamentally reconstructing the loan assistance model, with profound impacts on banks, platforms, and borrowers, reshaping the industry landscape.

The core of the new regulation is that banks must conduct independent risk control, with a comprehensive cost cap of 24%, platforms cannot charge borrowers, and the bank’s head office manages a whitelist, fully blocking the previous gray model of “bank funds, platform risk control, and high-interest charges.” Banks must independently approve credit, evaluate risks, and core risk control must not be outsourced. Banks’ funding shrinks significantly, disqualifying small and medium platforms from cooperation, drastically reducing industry funding. Once banks conduct independent risk control, small and medium platforms will be “cut off,” dealing a heavy blow to them.

Under Regulation No. 9, the previous “low-interest + high-fee” model, with annualized rates of 30%–50%, is completely blocked. Profits are sharply compressed, high-risk, high-interest customer groups are systematically excluded. The industry shifts from “earning high interest” to “small profits, high volume,” fundamentally changing the profit logic. The main income sources—membership, review, and service fees—are cut off. Platforms can only earn bank service fees, with razor-thin margins. Pure traffic platforms with no risk control capacity will lose their survival basis. This accelerates industry segmentation: top licensed, risk-controlled platforms remain on the bank whitelist, while many small platforms are expelled, leading to industry consolidation. The comprehensive cost cap of 24%, hidden fees eliminated, and high-interest space compressed seem to benefit borrowers, but in practice, lending will be stricter, with lower limits and more uniform interest rates. Some borrowers with average or poor qualifications may find it impossible to get loans.

Under strict regulation, the industry is rapidly entering a phase of elimination of the inferior and retention of the superior. Leading platforms begin shrinking their portfolios and controlling risks, with profits under pressure. For example, Fu’s tech company’s third-quarter 2025 lightweight asset loan scale decreased by 23% year-over-year, net profit down over 20%; several other institutions also saw continuous reductions in matching volume. Staff optimization is widespread, with layoffs ranging from 10% to 20%.

No. 9 regulation is a life-and-death line for the online lending industry. It ends the wild mode of “high interest, outsourced risk control, and chaotic charges,” pushing the industry from gray loan assistance into a regulated, compliant, light-service, risk-controlled mainstream financial track. Many small and medium platforms will exit, industry concentration will increase significantly, and borrowing costs and thresholds will rise.

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Author | Wu Ji

Author statement: Content is quoted from external media.