Foreign-invested payment institutions entering into China

On 27 July 2018, the Shanghai Head Office of the People’s Bank of China publicized the first application for payment business licence for foreign-invested companies (Application), marking it a step closer for the foreign-invested payment institutions to enter into China.

Based on the information provided in the Application, the applicant is Yuefan Business Information Consulting (Shanghai) Co., Ltd. (Yuefan), a wholly-owned subsidiary of World First Asia Limited, with a registered capital of RMB 100,000,000 and the registered address located in the Shanghai Free Trade Zone. The proposed application for payment business covers Internet and mobile payment businesses with nationwide coverage.

The Application was made by Yuefan in May following the publication of the Announcement No. 7 [2018] of the People’s Bank of China on Matters concerning Foreign-invested Payment Institutions by the People’s Bank of China (Announcement) on 19 March 2018, which clarifies the access rules and regulatory requirements for foreign-invested payment institutions.

According to the Announcement, three requirements must be satisfied by foreign-invested payment institutions before they can apply for a payment business licence:

1. Overseas institutions shall establish foreign-invested enterprises as the applicants of the payment business licence.
2. The foreign-invested payment institutions shall have a business system and disaster recovery system that are safe, standardised and able to independently complete the process of payment business in China.
3. The personal information and financial information collected and generated by foreign-invested payment institutions in China shall be stored, processed and analysed within the territory of China, and where overseas transfer is necessary for handling cross-border business, such transfer shall be compliant with Chinese laws and regulations and subject to the consent of the personal data subject.

In recent years, Chinese cross-border e-commerce industry has flourished and become one of the largest markets for cross-border payment business in the world. Easing of access to payment industry for foreign-invested payment institutions by adopting the same treatment for domestic enterprises and foreign-invested enterprises, and achieving the standardised regulatory requirements, will help improve the service of payment institutions, create a fair market environment for the payment industry, and encourage more foreign investors to explore Chinese market.