The enactment of the administrative measures on non-financial institutions by the People's Bank of China (PBOC) in 2010 has since then resulted in a proliferation of more than 200 third-party payment service companies in China. However, a number of financial risk indexes in China have climbed along with the rapid expansion of the third-party payment market, according to Digitimes Times. To tight up its supervision and appraisal mechanism over the third-party payment service companies, as well as to put a break on the third-party payment market, the PBOC promulgated a set of administrative measures governing online payment by non-banking institutions in July 2016.
According to data compiled by the PBOC, the number of online transactions conducted through third-party payment service companies totaled 82.15 billion in China in 2015, which were 2.25 times higher than the cases transacted through online payment systems at banks. Additionally, total transaction value via third-party payment service companies reached CNY49.5 trillion (US$7.42 trillion) in the year.
Under the new administrate rules, the third-party service companies is now required to check the identification of their client to fulfill a real-name verification process; to set a grade system for their clients and accordingly to give a different amount of payment allowance for individual clients; to appraise third-party payment service companies by a 5-categoy and 11-grade standards for the renewal of license; and demanding thrid-party service companies to meet the requirements on risk control as banks, Digitimes Research noted.
It will become an established policy of relevant supervisory agencies in China to gradually phase out those inferior third-party payment service companies through the tightening on issuance of license. However, the entering of brand smartphone vendors into the third-party payment market is a bright new development in China in 2016, under which Samsung Electronics and Huawei both have tied up with Alipay, and Xiaomi Technology has acquired a third-party payment service company in order to provide online payment services.
Meanwhile, China's government has gradually eased its regulatory controls on offshore transactions under its One Belt, One Road initiative encouraging third-party payment service companies to develop offshore transaction business.
Content from this article was part of a complete Digitimes Research Chinese-language report that has not yet been translated into English. If you are interested in an English version of the report or wish to receive more information about the report, click here to contact us and we will get back to you as soon as possible. Digitimes Research also provides quarterly tracking services for market sectors such as China Smartphone, China Smartphone AP, Taiwan ICT and Taiwan FPD. Click here for more information about Digitimes Research Tracking services.