As Internet finance has increasingly become red-hot in China, many people are itching to ride the wave, hoping to grab a piece of the action.

But with mounting investor appetite comes equally noticeable wariness over potential risks in the emerging industry. Officials and entrepreneurs are now calling for tighter regulation to streamline the market.

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"Internet is an open source. But there have to be rules when it comes to financing because we have to keep risks at bay," said Xu Nuojin, an official with the People's Bank of China, in a keynote speech Friday at the spring summit of the 2014 China Internet Finance Conference.

Online finance hinges on credit and thus has risks, albeit driven by Internet technologies including cloud computing and big data, he said.

Xu, deputy head of PBOC's statistics and analysis department, added that a viable way to regulate the industry is to raise the bar for access amid competition.

The central bank has been leading a government effort to stem potential risks from the bourgeoning industry, after Premier Li Keqiang vowed in his work report to promote the healthy growth of Internet finance by improving financial regulation during the two sessions.

On March 14, the bank put the brakes on QR code payments as well as virtual credit cards expected to be launched by China CITIC Bank jointly with Alibaba’s Alipay and Tencent's Tenpay, both third party online payment platforms.

The PBOC has also been mulling plans to restrict single purchases and one-off money transfers via third-party online payments.

Third-party online payments have witnessed explosive growth in the past few years. Statistics from EnfoDesk Analysys International show transactions via the platforms hit 17.9 trillion yuan ($2.88 trillion) last year, up 43.2 percent from a year earlier.

"Online payment is just a branch of the Internet finance industry, albeit a popular and significant one," said Zhong Jianwen, deputy general manager of Hexun.com, a leading online platform in China providing financial information services.

The industry also embraces such services as P2P online lending, crowding funding, online wealth management products and virtual currencies, she added.

"It seems thrilling to join the tide of the booming Internet finance, but also really dangerous if not playing well in the field," said Song Fuliang, an adviser to the central bank. "Any company with any financial service should abide by certain rules once they get into the financial field. They have to be able to recognize, assess, manage and control risks."

"Risk control is undoubtedly the first and foremost thing we need to be aware of," said Liu Guangdong, chief executive officer of Guanqun Chicheng Investment Management Ltd.

The platform, by absorbing idle money from individuals, has been providing services to thousands of small and micro enterprises that are desperate for cash.

Online transactions via such platforms totaled 105.8 billion yuan ($17 billion) last year, nearly quintupling those in 2012.

In the second half of 2013, more than 70 P2P online lending platforms were forced to close or simply disappeared, weighing largely on the related families and the nascent industry.

"There are various reasons behind the phenomenon, but I think 60 percent are ethical problems," Liu said. "The threshold of the industry should be higher, laws and regulations tighter and punishment tougher."

The amount of money P2P lending platforms help manage may not be big,, but could possibly be all savings lenders have and become the lifeblood of borrowers, he added.

Internet finance may rock the traditional banking system but at the end of the day, it actually completes the system because such financial innovations, if better regulated, will help breathe new life into the financial market, Xu of the PBOC said. "We should embrace it with an open heart."

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