China’s Central Bank Clips Wings of Two Third-Party Payment Providers
Liao Shumin
DATE:  May 14 2021
/ SOURCE:  Yicai
China’s Central Bank Clips Wings of Two Third-Party Payment Providers China’s Central Bank Clips Wings of Two Third-Party Payment Providers

(Yicai Global) May 14 -- China’s central bank has narrowed the business scope of two third-party digital payment providers after reviewing the first 27 companies licensed to offer such services. Ant Group, Tencent Holdings and other larger players had their permits extended without any changes.

The People’s Bank of China yesterday revoked the online and mobile payment licenses of International Payment Solutions, trimming back its business scope to bank card payments processing. The Shanghai-based firm had already been punished in July 2019 for breaching the rules, when it was fined CNY49.7 million (USD7.7 million) and had illicit gains of CNY9.7 million (USD1.5 million) confiscated.

The PBOC also punished Sandpay Network Services Development yesterday for also flouting payment business rules, saying the firm can no longer process bank card payments in the provinces of Guangdong and Shanxi. In 2018, the PBOC's Shanghai branch fined it CNY24.7 million for a similar violation of rules.

China's third-party payment market has grown rapidly, despite the relative scarcity of payment licenses. In the third quarter of last year, transactions jumped 16.2 percent from a year earlier to CNY65 trillion (USD10.1 trillion), according to a report by iResearch Consulting Group.

Ant’s Alipay and Tencent’s Tenpay, the two largest players in China, kept their business type and scope unchanged, retaining permission for internet and mobile third-party transactions, nationwide bank card payment processing and other services.

Third-party payment is an online transaction model in which non-banks facilitate payments in connection with the banking network. The central bank began to regulate such firms in 2010 and issued payment licenses to 27 in May 2011, with the permits to be reviewed every five years. Over 250 institutions now have such licenses, but the PBOC announced in August 2016 that it would not issue any more.

Editor: Tom Litting

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Keywords:   PBOC,International Payment Solutions,Sandpay Network Services Development