Regulation on the Supervision and Administration of Non-Banking Payment Institutions

Regulation on the Supervision and Administration of Non-Banking Payment Institutions

Order of the State Council of the People's Republic of China

(No. 768)

The Regulation on the Supervision and Administration of Non-Banking Payment Institutions, as adopted at the 19th executive meeting of the State Council on November 24, 2023, is hereby issued and shall come into force on May 1, 2024.

Premier: Li Qiang

December 9, 2023

Regulation on the Supervision and Administration of Non-Banking Payment Institutions

Chapter I General Provisions

Article 1 This Regulation is developed in accordance with the Law of the People's Republic of China on the People's Bank of China, the E-commerce Law of the People's Republic of China, and other applicable laws for the purposes of regulating the acts of non-banking payment institutions, protecting the lawful rights and interests of the parties, preventing and resolving risks, and promoting the sound development of the non-banking payment industry.

Article 2 For the purposes of this Regulation, “non-banking payment institution” means a limited liability company or joint-stock limited company legally formed within the territory of the People's Republic of China (“within China”), excluding banking financial institutions, which has obtained a payment business permit to engage in the payment business, such as the transfer of monetary funds based on electronic payment instructions submitted by payees or payers (“users”).

A non-banking institution outside the territory of the People's Republic of China (“overseas”) that intends to provide cross-border payment services to domestic users shall form a non-banking payment institution within China in accordance with this Regulation, except as otherwise prescribed by the state.

Article 3 A non-banking payment institution shall provide services in accordance with the provisions of laws and administrative regulations, follow the principles of security, efficiency, good faith, and fair competition, aim at providing small-amount and convenient payment services, safeguard national financial security, and may not damage national interest, public interest, or others' lawful rights and interests.

Article 4 The supervision and administration of non-banking payment institutions shall comply with the guidelines, policies, decisions, and arrangements of the Party and the state, focus on serving the real economy, coordinate development and security, and maintain the order of fair competition.

The People's Bank of China (PBC) shall supervise and administer non-banking payment institutions in accordance with the law. The branches of the PBC shall perform supervision and administration duties as authorized by the PBC.

Article 5 A non-banking payment institution shall comply with the provisions on combating money laundering, financing of terrorism, telecom and online fraud, preventing and disposing of illegal fundraising, and combating gambling, among others, and take necessary measures to prevent illegal and criminal activities.

Chapter II Formation, Modification, and Termination

Article 6 The formation of a non-banking payment institution shall be subject to the approval of the PBC and a payment business permit shall be obtained. The word “payment” shall be indicated in the name of a non-banking payment institution.

Without approval in accordance with the law, no entity or individual may engage in the payment business directly or in disguise or use the word “payment” in the name or business scope of an entity, except as otherwise prescribed by any law, administrative regulation, or the state. After the payment business permit is deregistered in accordance with the law, the word “payment” may not continue to be used in the name and business scope of the institution.

Article 7 The formation of a non-banking payment institution shall comply with the provisions of the Company Law of the People's Republic of China and the following conditions shall be met:

(1) It has the registered capital as required by this Regulation.

(2) Its principal shareholders and actual controller are in good financial condition, have a good integrity record, and have no record of any major violation of laws and regulations in the last three years. If a principal shareholder or actual controller is a company, its equity structure shall be clear and transparent, without any ownership dispute.

(3) The proposed directors, supervisors, and officers are familiar with the relevant laws and regulations, have the business management capability required for the performance of their duties, and have no record of major violations of laws or regulations in the last three years.

(4) It has business premises, security protection measures, and business systems, facilities, and technologies in compliance with relevant provisions.

(5) It has a sound corporate governance structure, internal control and risk management rules, an exit plan, and a mechanism for the protection of users' rights and interests.

(6) It meets other prudential conditions prescribed by laws, administrative regulations, and rules of the PBC.

Article 8 The minimum registered capital of a to-be-formed non-banking payment institution shall be 100 million yuan and shall be paid-in monetary capital.

The PBC may increase the minimum registered capital specified in the preceding paragraph according to the business type, geographical scope of operations, business scale, and other factors of the non-banking payment institution.

A shareholder of a non-banking payment institution shall contribute his or her own capital for shares, and may not contribute capital not owned by him or her, such as funds held as a trustee and debt funds, for shares.

Article 9 To apply for the formation of a non-banking payment institution, an applicant shall submit to the PBC a written application and materials proving that it meets the conditions specified in Articles 7 and 8 of this Regulation.

Article 10 The PBC shall decide to approve or disapprove an application within six months of accepting the application. If it approves the application, it shall issue a payment business permit and make an announcement thereon; or if it disapproves the application, it shall notify the applicant in writing with an explanation of the reasons for the disapproval.

A payment business permit shall indicate the business type and geographical scope of operations that a non-banking payment institution may engage in.

Article 11 After receiving the payment business permit, the applicant shall promptly undergo registration formalities at the market regulatory department and obtain the business license.

If a non-banking payment institution has not provided payment services for two consecutive years or more after its formation without any justifiable reason, the PBC shall deregister its payment business permit.

Article 12 The main business premises of a non-banking payment institution shall be consistent with its registered domicile. If a non-banking payment institution intends to provide payment services to merchants engaging in offline operations in a province, autonomous region, or municipality directly under the Central Government other than the place of its domicile, it shall establish branches in accordance with the applicable provisions and undergo recordation at the PBC.

For the purposes of this Regulation, “merchant” means a business entity that has entered into a payment service agreement with a non-banking payment institution and has its funds settled by a non-banking payment institution in accordance with the agreement.

Article 13 A non-banking payment institution shall obtain the approval of the PBC for handling the following matters:

(1) Change of name, registered capital, business type, or geographical scope of operations.

(2) Change of domicile across provinces, autonomous regions, or municipalities directly under the Central Government.

(3) Change of any principal shareholder or actual controller.

(4) Change of any director, supervisor, or officer.

(5) Business combination or division.

If a non-banking payment institution applies for the modification of its name or registered capital, the PBC shall make a written decision to approve or disapprove the application within one month of accepting the application. For an application for handling other matters listed in the preceding paragraph, the PBC shall make a written decision to approve or disapprove the application within three months of accepting the application. Upon approval, the non-banking payment institution shall undergo relevant registration formalities at the market regulatory department in accordance with the law.

Article 14 A non-banking payment institution intending to terminate its payment services shall apply to the PBC for the deregistration of its payment business permit. If a non-banking payment institution applies for the deregistration of its payment business permit or if its payment business permit is revoked or canceled by the PBC, it shall make a plan to effectively ensure the security of users' funds and information according to the applicable provisions and make an announcement to users. If a non-banking payment institution is dissolved, the institution shall undergo liquidation in accordance with the law and the liquidation process shall be subject to the supervision of the PBC.

A non-banking payment institution may only undergo modification or deregistration formalities at the market regulatory department after completing the formalities for the deregistration of the payment business permit.

Chapter III Payment Business Rules

Article 15 Non-banking payment business is divided into two types: operation of stored-value accounts and processing of payment transactions based on whether prepaid funds from payers can be received. However, the single-purpose prepaid card business does not belong to the payment business specified in this Regulation.

The specific classification methods and rules for the supervision and administration of stored-value account operation and processing of payment transactions shall be prescribed by the PBC.

Article 16 A non-banking payment institution shall engage in the payment business according to the business type and geographical scope of operations specified in its payment business permit, and without approval, shall not provide other services which shall be subject to approval in accordance with the law.

A non-banking payment institution may not alter, sell, lease, or lend its payment business permit or illegally transfer its administrative licensing in any other form.

Article 17 A non-banking payment institution shall, as required for prudential operation, establish, improve, and implement compliance management rules, internal control rules, business management rules, risk management rules, emergency response plans, and the mechanism for the protection of users' rights and interests.

Article 18 A non-banking payment institution shall have necessary and independent business systems, facilities, and technologies, and ensure the timeliness and accuracy of processing of payment transactions, as well as the continuity, security, and traceability of payment business in accordance with compulsory national standards and the relevant requirements for network and data security management.

The business systems and backups of a non-banking payment institution shall be stored within China.

Article 19 A non-banking payment institution providing payment services for domestic transactions shall complete transaction processing, fund settlement, and data storage within China.

A non-banking payment institution providing payment services for cross-border transactions shall comply with the provisions on cross-border payments, cross-border RMB business, foreign exchange management, and cross-border data flow.

Article 20 A non-banking payment institution shall enter into payment service agreements with users. The non-banking payment institution shall prepare the terms of agreements under the principle of fairness, and make them public in prominent positions of its business premises, official website, and mobile Internet applications, among others.

The payment service agreement shall specify matters such as the rights and obligations of a non-banking payment institution and users, the payment service process, the transmission path for electronic payment instructions, fund settlement, principles for the resolution of disputes, and liability for the breach of contract, and the agreement shall not include any provision such as that excludes or restricts competition, unreasonably exempts or mitigates the liability of a non-banking payment institution, increases users' liability, or restricts or excludes the major rights of users. With regard to the terms in the agreement that are sufficient to affect whether users agree to use payment services, a non-banking payment institution shall reasonably remind users to pay attention t......