28.07.10 23:37 Age: 8 yrs
The release of the Measures on Administration of Non-financial Institution’s Payment Services
On June 12th 2010, the People’s Bank of China (the “PBOC”) released the Measures on Administration of Non-financial Institution’s Payment Services (the “Regulation”). This regulation which commences from September 1, 2010 is the first regulation regarding third-party payment institutions in China.
Currently, there are no specific rules on the administration of a non-financial institution’s payment service, with all of the payment service activities regulated by the Measures for Administration of Payment/Settlement Organizations. With this new Regulation, however, the importance of the non-financial institutions as a subject of payment service is more clearly established. There are five chapters with fifty articles in the Regulation, covering the business scope of payment institutions, the application for and granting of payment service operation permits, the regulation of payment institutions and the legal liabilities.
Some main stipulations are concluded as follows:
Specific definition of the non-financial payment service
In article 2 of the Regulation, the scope of the payment service is listed as: online payment, issuance and acceptance of pre-paid cards, acquiring of bank cards, and any other services regarding the transfer of monetary funds as determined by the PBOC.
Payment Service Operation Permit
A non-financial institution shall not perform a payment service before obtaining the permit from the PBOC. A Payment Service Operation Permit will be issued to the institution if it meets certain requirements. For example, the minimum amounts of registered capital necessary for the application at nationwide and provincial levels are RMB 100 million and 30 million respectively; the institution shall have qualified promoters and more than five senior management personnel familiar with payment services; and the institution shall comply with the anti-money laundering countermeasures, to name but a few. Any institutions that have already operated the payment service before the release of the Regulation should apply for the Permit in one year.
Protection of the customer reserve
Customer reserve is the reserved capital of the customer for handling the payment service. The customer reserve should be voluntarily paid and accepted. The reserve money is not owned by the institution itself, and the embezzlement of the money is stringently prohibited. The reserve money should be saved in one and only one commercial bank. The bank reserving the money should bear the responsibility of surveying its use by the customer.
“In recent years, the diversity and convenience of the non-financial institution payment has satisfied the public’s increasing need for e-commerce and played an important role in economic-growth. However, the expansion of the scale and the spread of the new tools of the payment service bring new problems to its development. Appropriate legislation is required and this Regulation is certainly a step in the right direction. It helps to standardize the fast developing third-party payment service, and the market structure is re-modulated as well.” suggests Chen, Fleur, an experienced attorney at Lehman, Lee & Xu.
As a prominent Chinese corporate law firm and trademark and patent agency, Lehman, Lee & Xu has always maintained a focus on the issues of banking & finance. The firm has also been recognized as one of the top full service and intellectual property firms in China by several international magazines. It now has offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm is managed by Mr. Edward Lehman, a leading expert on corporate law with over twenty years of practice experience in Mainland China.
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