The Communist Party of China Central Committee and the State Council have attached great importance to the sound operation and high-quality development of the non-bank payment sector. In December 2023, the State Council issued the Regulations on the Supervision and Administration of Non-bank Payment Institutions (hereinafter referred to as the Regulations). In order to implement the Regulations, effectively protect the legitimate rights and interests of users, and better give play to the role of non-bank payment institutions (hereinafter referred to as payment institutions) in serving the real economy, the People’s Bank of China (PBOC) recently released the Detailed Rules for the Implementation of the Regulations on the Supervision and Administration of Non-bank Payment Institutions (hereinafter referred to as the Detailed Rules), which has come into force on the date of issuance. The Administrative Measures for the Payment Services Provided by Non-financial Institutions (PBOC Order No.2 [2010]) and the Detailed Rules for the Implementation of the Administrative Measures for the Payment Services Provided by Non-financial Institutions (PBOC Announcement No.17 [2010]) have been repealed simultaneously.
The Detailed Rules consists of 77 articles in six chapters, i.e., General Provisions; Establishment, Change and Termination; Payment Business Rules; Supervision and Administration; Legal Liability; and Ancillary Provisions. It aims to specify the rules set out in the Regulations and provide strong institutional support for the well-regulated and healthy development of payment institutions. Its main contents are the following.
First, the requirements regarding administrative permits are explicitly laid down. In line with the administrative permit-related items listed in the Regulations, the Detailed Rules specifies the application submissions, the conditions to meet, as well as the review procedures regarding payment institutions’ establishment, change and termination, so as to make regulatory rules more transparent and further improve the business environment.
Second, payment business rules are specified. The Detailed Rules clearly provides for the classification of payment businesses and the connection between the old business permits and the new to ensure a smooth transition. It sets requirements for a mechanism safeguarding user rights and interests and for the adjustment of fee standards so as to fully protect the rights of users to know and to choose.
Third, the regulatory duties and legal liability are specified. The Detailed Rules clarifies the applicable procedures, such as for law enforcement inspections and the reporting of material issues and risk events. It strengthens penetrating regulation over the equities of payment institutions to guard against their non-major shareholders or beneficial owners evading regulation through concerted action or other means. It also provides for the filing of penalties by the PBOC and its branches in terms of the powers and measures.
Fourth, arrangements are laid out for the transitional period. The Detailed Rules provides that the existing payment institutions shall meet, by the end of the transitional period, the requirements such as conditions for establishment and net assets as a ratio to the average daily balance of reserve funds. Starting from the date the Detailed Rules comes into force, the transitional period shall last until the expiration of the payment business permit. In case this period turns out shorter than 12 months, it shall last to be 12 months long.
Going forward, the PBOC will make continued efforts to effectively implement the Regulations and the Detailed Rules. We will see that payment institutions be committed to serving the real economy, adhere to the bottom line of regulatory compliance, and pursue innovation while upholding fundamental principles, thereby promoting the healthy and sustainable development of the non-bank payment sector.
