The People's Bank of China (PBC), the country's
central bank, will directly oversee electronic payment businesses
and grant licenses for related service providers, participants at a
seminar held in Beijing on August 19 were quoted in Monday's
China Business.
"The seminar reached two consensuses: that third-party payments,
including e-payments, should be classified as non-banking financial
business of payment organizations and supervised by the central
bank; and that the central bank will issue licenses for market
entry," an anonymous source was reported as saying.
The bank's Department of Payment and Clearing publicized a draft
on June 10 to solicit opinions, and the seminar was to pave the way
for the official promulgation of the Management Regulation on
Payment Organizations.
The details are not yet available, but the final version is
expected to be released in the next a few months.
Currently, many e-payment service providers, including the giant
e-Bay and Taobao.com, don't need to register with the central
bank.
"Paypal, an affiliate of e-Bay, runs its business with approval
from financial watchdogs in the US and EU, but it has conducted
operations in China since July 11 after cooperating with Shanghai
Wangfuyi Technology Co., Ltd, which only has an internet content
provider license," one participant said.
The draft stipulated that foreign investors can co-invest in
China's payment organizations with local partners, but their stakes
are restricted to below 50 percent.
Registered capital, cash deposits and risk-resistance would be
key criteria for companies to gain e-payment licenses. The draft
proposed that national payment organizations must have a minimum of
100 million yuan (US$12.3 million) registered capital, regional
organizations 50 million yuan (US$6.17 million) and local
organizations 10 million yuan (US$1.23 million).
Some participants complained that 100 million yuan (US$12.3
million) registered capital was too high for small- and
medium-sized enterprises and would hurt the booming e-commerce
sector. But others worried that too-low registered capital
requirements would bring huge financial risks.
It is difficult to supervise e-payments since authenticity and
legitimacy of online transactions are hard to guarantee; business
registration and tax collection are also big problems.
Some banks have to raise cash deposits to prevent fraud. The
Industrial and Commercial Bank of China, one of the "Big Four"
state-owned banks, stipulates that e-payment service providers must
transfer 30 percent of transaction volume from the previous month
to their cash deposit accounts. If companies terminate their
operations, the bank said it would inform clients immediately.
Backgrounder:
Aug. 28, 2004? the Standing Committee of
the 10th National People's Congress passed the Law on Electronic
Signatures.
Jan. 8, 2005? the State Council
promulgated Opinions on Accelerating the Development of E-commerce
to boost e-commerce and online payment and settlement services.
Jun. 10, 2005? the central bank's
Department of Payment and Clearing published the draft Management
Regulation on Payment Organizations to solicit public opinion.
Jul. 21, 2005? the China Internet Network
Information Center reported in its annual survey that China now has
over 103 million internet users and nearly 20 percent of them have
shopped online at least once. Online trade volume in the first half
of the year was estimated at 10 billion yuan (US$1.23 billion),
with nearly half of that paid online.
(China.org.cn by Tang Fuchun September 2, 2005)
