The "Regulations on the Supervision and Administration of Non-bank Payment Institutions" was officially promulgated today (17th), with a total of 6 chapters and 60 articles, which will further bring non-bank payment institutions and their business activities into the track of rule of law for supervision.
The Regulations will come into force on 1 May 2024. The key provisions are as follows↓↓↓
Clarify the definition and establishment license of non-bank payment institutions
A non-bank payment institution is defined as a company, other than a banking financial institution, that transfers monetary funds based on an electronic payment instruction submitted by a user.
The establishment of non-bank payment institutions shall be approved by the People's Bank of China and a payment business license shall be obtained. The word "payment" shall be indicated in the name of the non-bank payment institution. Clarify the conditions for establishment and strictly control the entry gates.
Non-bank payment institutions shall have the purpose of providing small-amount and convenient payment services, and shall not engage in other businesses that require approval in accordance with law without approval, and shall not engage in or covertly engage in clearing business.
Improve payment business rules
To meet the needs of payment business development, the payment business is divided into two categories: stored value account operation and payment transaction processing, and the People's Bank of China is authorized to formulate specific rules.
Clarify the requirements for the management of payment business, and stipulate that non-bank payment institutions shall improve business management and other systems, and have business systems, facilities and technologies that meet the requirements, so as to ensure the continuity, security and traceability of payment business.
Clarify the management regulations on payment accounts, reserves, payment instructions, etc., require payment accounts to be opened in the user's real name, and non-bank payment institutions shall not embezzle, occupy or borrow reserves, and shall not forge or alter payment instructions, so as to prevent risks in the non-bank payment industry.
Protect the legitimate rights and interests of users
The Regulations stipulate that when a non-bank payment institution signs a payment service agreement with a user, the terms of which shall be drafted in accordance with the principle of fairness.
Non-bank payment institutions shall ensure the security of users' funds and information, and shall not entrust the handling of relevant core business and technical services to third parties; properly preserve user information and transaction records, establish an effective due diligence system, strengthen risk management, and take effective measures to ensure the security of payment accounts to prevent payment accounts from being used for illegal fundraising, telecommunications network fraud, money laundering, gambling and other illegal and criminal activities.
Clarify regulatory responsibilities and legal responsibilities
It stipulates that the supervision and management of non-bank payment institutions shall implement the Party and state's line, principles, policies, and decision-making arrangements, focus on serving the real economy, coordinate development and security, and maintain the order of fair competition.
Clarify the People's Bank of China's supervisory responsibilities, regulatory measures and risk disposal measures, etc., and local people's governments cooperate with the People's Bank of China to do a good job in risk handling. The Regulations also stipulate legal liability for violations.
Alipay and WeChat payment voiced
In recent years, the non-bank payment business has developed rapidly with the rise of new business formats such as digital economy and e-commerce in mainland China, and has played an important role in the field of small-value and convenient payment.
As of the end of September, there were 185 non-bank payment institutions (hereinafter referred to as "payment institutions") in China, with an annual transaction volume of more than 1 trillion yuan and an amount of nearly 400 trillion yuan, accounting for about 80% and 10% of the country's total electronic payment business respectively, with an average daily reserve balance of more than 2 trillion yuan, serving more than 1 billion individuals and tens of millions of merchants.
A responsible person of the People's Bank of China revealed that after the promulgation of the "Regulations", detailed detailed rules for the implementation of the "Regulations" will be formulated, detailed and clarified the specific classification methods of payment business, and the transitional provisions for the connection between new and old business types, further standardize the procedures for licensing and punishment, implement the "list-style" examination and approval, and strictly administer according to law. The People's Bank of China will also step up efforts to improve other supporting documents of the "Regulations" and, in light of the provisions of the "Regulations", step up the revision and cleaning up of existing rules and normative documents in the field of non-bank payments.
After the promulgation of the "Regulations", the main entities in the payment market stated that they would further improve the relevant business rules, actively implement the "Regulations", further strengthen the protection of the rights and interests of financial consumers, better meet the payment and settlement needs of users, and continuously improve the quality and efficiency of serving the real economy.
The Payment and Clearing Association said that the majority of payment institutions should strengthen their organization and leadership, do a good job of sorting out and preparing for work, comprehensively and solidly implement the requirements of the "Regulations", improve the construction of relevant systems of their institutions, and comprehensively clean up practices that do not conform to the spirit Xi of the "Regulations";
Alipay said that it will further strengthen the protection of the rights and interests of financial consumers, adhere to the integration of financial consumer protection into corporate governance, corporate culture and business strategy, and solidly improve the level of financial consumer protection. Integrate consumers' right to know, right to choose and sense of security into product design, and at the same time deepen innovative consumer education work to create a characteristic brand of inclusive education.
Under the guidance of the financial management department, it will adhere to the purpose of small amounts and convenience for the people, focus on the main business, improve services, better meet the payment and settlement needs of users, continuously improve the quality and efficiency of serving the real economy, and inject more value and vitality into the high-quality development of the economy and society.
Responsible persons of the Ministry of Justice and the People's Bank of China
"Regulations on the Supervision and Administration of Non-bank Payment Institutions" answers questions from reporters
On December 9, 2023, Premier Li Qiang signed Decree No. 768 of the State Council, promulgating the Regulations on the Supervision and Administration of Non-bank Payment Institutions (hereinafter referred to as the "Regulations"), which will come into force on May 1, 2024. A few days ago, responsible persons of the Ministry of Justice and the People's Bank of China answered reporters' questions on issues related to the "Regulations."
Q: Please briefly introduce the background and general idea of the Regulations.
A: The CPC Central Committee and the State Council attach great importance to the development of the non-bank payment industry and risk prevention and control. The report of the 20th National Congress of the Communist Party of China proposed that all kinds of financial activities should be brought under supervision in accordance with the law. The Central Financial Work Conference proposed to strengthen the construction of financial rule of law and promote legislation in key financial areas and emerging fields in a timely manner. The Ministry of Justice and the People's Bank of China thoroughly implemented the decisions and arrangements of the Party Central Committee and the State Council, and formed the draft Regulations on the basis of in-depth investigation and study, extensive listening to the opinions of departments, institutions, experts and other parties, and openly soliciting opinions from the public. In the process of drafting the "Regulations", the following ideas were mainly grasped: First, implement the party and the state's line, principles, policies, decision-making and deployment, and promote healthy competition and standardized and healthy development of the non-bank payment industry. The second is to adhere to problem-oriented and systematic thinking, and bring the full-chain and full-cycle supervision of the non-bank payment industry into the track of rule of law and standardization, so as to prevent payment risks. The third is to guide non-bank payment institutions (hereinafter referred to as payment institutions) to serve the real economy, better protect the legitimate rights and interests of users, and further play their positive role in prospering the market economy and facilitating people's lives.
Q: What is the development of the non-bank payment industry, and what is the positive significance of the introduction of the "Regulations" to promote the standardized and healthy development of the industry?
Answer: With the rise of new business formats such as digital economy and e-commerce in mainland China, non-bank payment business has developed rapidly, and has played an important role in the field of small-value and convenient payment. At present, the annual transaction volume of payment institutions exceeds 1 trillion and the amount is nearly 400 trillion yuan, accounting for about 8% and 1% of the total electronic payment business in the country respectively, with an average daily reserve balance of more than 2 trillion yuan, serving more than 1 billion individuals and tens of millions of merchants, and mobile payment ranks at the world's leading level, effectively helping the development of the real economy and improving people's livelihood.
In recent years, the People's Bank of China has adhered to the equal emphasis on development and regulation, promoted the centralized depository of payment institutions' reserves, disconnected them from commercial banks, and urged large payment platform enterprises to rectify their payment business, prevent hidden risks, and achieved positive results. At the same time, however, some payment institutions operate in violation of regulations from time to time, such as: misappropriating user funds in violation of regulations, leaking or improperly collecting and using user information, and individual payment institutions taking risks to provide fund transfer channels for illegal and criminal activities such as telecommunications network fraud and cross-border gambling.
The promulgation of the "Regulations" will upgrade the effective system in regulatory practice to administrative regulations, further consolidate the legal foundation for the standardized and healthy development of payment institutions, and help create a law-based business environment, stabilize the expectations of all parties, stimulate market vitality, and also help protect the legitimate rights and interests of users, prevent and resolve risks, and promote the high-quality development of the non-bank payment industry.
Q: What arrangements have been made in the "Regulations" to further strengthen supervision and protect the legitimate rights and interests of users around the overall development and security?
Answer: The "Regulations" conscientiously implement the spirit of the Central Financial Work Conference, put the prevention and resolution of risks, and the protection of the legitimate rights and interests of users in a prominent position, so as to better coordinate development and security.
The first is to adhere to the licensed operation and strict entry threshold. Implement access management in accordance with the principle of "license before license", clarify the access conditions for payment institutions' registered capital, major shareholders, actual controllers, senior executives, etc., implement license management for changes in major matters, and establish and improve a normalized exit mechanism for institutions with serious violations of laws and regulations. The second is to improve the rules of payment business and strengthen risk management. It is stipulated that payment institutions shall improve business management and other systems, and have business systems, facilities and technologies that meet the requirements. Strengthen the management system for payment accounts, reserves, and payment instructions, and make it clear that payment institutions must not misappropriate, occupy, or borrow customer reserves, and must not forge or alter payment instructions. Consolidate the responsibilities of payment institutions and users, such as due diligence and risk monitoring. The third is to strengthen the protection of users' rights and interests. It stipulates that payment institutions shall draft the terms of the agreement in accordance with the principle of fairness, and protect users' right to know and the right to choose. Strengthen the protection of user information, and clarify relevant requirements for information processing, information confidentiality, and information sharing. Payment institutions are required to clearly mark the price of the services provided and charge reasonable fees. It is clarified that payment institutions shall perform the main responsibility for handling complaints. Fourth, increase the degree of punishment for serious violations of laws and regulations in accordance with the law. The People's Bank of China may, in accordance with the law, impose penalties on relevant payment institutions, such as fines, restrictions on some payment operations, or order them to suspend business for rectification, up to the revocation of their payment business licenses. At the same time, it is clarified that directors, supervisors, senior executives and other personnel who are directly responsible may be punished according to specific circumstances, and market entry ban measures may also be adopted if the circumstances are serious.
Q: What are the considerations for the reclassification of payment business into two categories: stored value account operation and payment transaction processing?
Answer: Since 2010, the Measures for the Administration of Payment Services of Non-Financial Institutions have divided payment business into three categories: online payment, bank card acquiring and prepaid card business, according to transaction channels and acceptance terminals. With technological innovation and business development, emerging methods such as barcode payment and face payment have emerged, and the existing classification methods cannot well meet the needs of market development and supervision. Based on years of regulatory practice, the Regulations draw on the experience of other countries and regions in the classification of payment business, adhere to the concept of functional supervision, and start from the essence of the business, according to whether it can receive the payer's advance funds, and are divided into two categories: stored value account operation and payment transaction processing.
The new classification method has the following characteristics: First, it has good scalability, which is conducive to preventing regulatory gaps. Under the new classification method, no matter what the external form of payment business is, it can be classified and managed according to the business substance, which can better adapt to the development and changes of the industry, and classify various new payment channels and payment methods into two basic business types. The second is to avoid regulatory arbitrage, which is conducive to promoting fair competition. Based on the essence and risk characteristics of the business, the new classification method penetrates the superficial form of the payment business, which is conducive to unifying the access conditions and business rules requirements such as capital, eliminating regulatory depressions, and forming a fair institutional environment. At the same time, the supplementary provisions of the Regulations make it clear that the transitional measures for non-bank payment institutions established in accordance with relevant provisions shall be prescribed by the People's Bank of China. The People's Bank of China will study and formulate implementation rules in the near future to connect the new business types with the original classification methods and promote a smooth transition.
Q: After the promulgation of the Regulations, what will the People's Bank of China do next?
A: After the promulgation of the Regulations, the People's Bank of China will do the following work: First, strengthen policy publicity and interpretation, and interpret the Regulations to payment institutions, clearing institutions, and branches of the People's Bank of China through various means, so that all parties concerned can fully understand and grasp the content of the Regulations, urge all payment institutions to conduct business in accordance with laws and regulations, and protect the legitimate rights and interests of users. The second is to formulate detailed rules for the implementation of the "Regulations" and do a good job in implementing them. Refine and clarify the specific classification methods of payment business, the transitional provisions for the connection between new and old business types, etc., further standardize the procedures for licensing and punishment, implement the "list-style" approval, and strictly administer in accordance with the law. The third is to pay close attention to improving the other supporting documents of the "Regulations". According to the provisions of the "Regulations", we should pay close attention to the revision and clean-up of existing regulations and normative documents in the field of non-bank payment.
The People's Bank of China will conscientiously implement the decisions and arrangements of the Party Central Committee and the State Council, take the promulgation of the Regulations as an opportunity to coordinate development and security, focus on accelerating the construction of a financial power and other goals, unswervingly follow the road of payment development with Chinese characteristics, and promote the sustained and high-quality development of the non-bank payment industry in the mainland.
Editor|He Xiaotao covers the source
Proofreading|Liu Siqi
Cover picture source: Photo by Liu Guomei, Daily Economic News
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