China's Central Bank Issues 3rd-Party Payment Regulations
Sina Tech, 6/21/10
The People's Bank of China (PBoC) has released its "Administrative Regulations Pertaining to Payment Services Offered by Non-Financial Institutions." Though the regulations have not yet been put into effect by the PBoC, they state that no non-financial institution nor individual can engage in payment services, publicly or covertly, as of September 1, 2010.
The regulations define "payment services" to include online payment as well as other forms of payment. "Online payment" is defined as the use of the Internet or specialized networks to transfer cash between two parties, including online payment, mobile payment, fixed-line payment, and DTV-based payment.
The regulations also stipulate that non-financial organizations that wish to provide payment services must obtain a Payment Services License within one year to become a "payment organization." Organizations that fail to obtain a license before the deadline may not continue to offer payment services. The PBoC will oversee the issuance and administration of the licenses. Applications must be submitted to local PBoC branches for evaluation and approval.
Applicants for a Payment Services License must meet the following criteria: (1) serve as the legal representative of a limited liability company or public corporation registered within China; (2) meet the minimum registered capital as per regulations, namely RMB 100 mln for applicants planning to offer nationwide payment services, and RMB 30 mln for applicants planning to offer payment services at the provincial level; (3) have one investor who meets regulatory criteria, specifically one who has established the LLC or corporation, have continuously provided a financial institution with information processing support services for two years or more as of the application date, have recorded a profit for two years or more as of the application date, and not have been penalized for committing or enabling any illegal activities via payment services in the past three years; (4) have at least five senior executives familiar with payment services; (5) carry out required anti-money laundering measures; (6) have all required payment service facilities; (7) have established a robust organizational structure, internal control mechanisms and risk management measures; (8) have a business location that meets requirements and implemented security measures; and (9) the applicant and other senior managers must not have been penalized for committing or enabling any illegal activities via payment services in the past three years.
Editor's Note: According to a separate report from DoNews, a spokesperson for Alipay, the third-party payment subsidiary of Chinese e-commerce company Alibaba Group, has said that Alipay will apply for a Payment Services License in compliance with the new regulations, and that the company is fully confident it will be awarded a license.
A source at Alipay said that the newly-issued regulations are essentially in line with those previously released in a draft for public comment.
Keywords: Internet license Alipay mobile payment People's Bank of China fixed-line payment third-party payment online payment regulation e-payment
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