The People's Bank of China (PBOC), China's central bank, said on Wednesday in an announcement on its website that the access limits for foreign-funded payment institutions would be removed and applications to operate such a business are welcome.
To introduce competition
The move showed not only China's confidence in its payment industry to be involved in the international competition, but also its resolve to accelerate the self-improvement of its domestic payment platforms through market openness, Mei Xinyu, a researcher from the Chinese Academy of International Trade and Economic Cooperation, told this journalist.
"The market is bound to be opened up rather than under protection. The competition will urge domestic payment companies to constantly improve themselves," he said.
Dong Ximiao, a senior researcher from the Chongyang Institute for Financial Studies of the Renmin University of China, holds similar views.
"Foreign-funded payment institutions when introduced are theoretically expected to break the current highly monopolistic pattern in the domestic payment market, especially in the non-banking payment market," he said to the journalist.
Hard to change overall landscape
China's payment industry had witnessed a rapid growth since 2010 when the licensing system was established.
From 2013 to 2017, the business volume of the payment institutions had surged by about 8.6 times from 37.1 billion to 319.3 billion transactions, with its value soaring from RMB 18 trillion to RMB 169 trillion.
The compound annual growth rate of the volume and value had increased by 71 percent and 75 percent respectively, according to the central bank.
Foreign-funded payment institutions like PayPal have been coveting the cake for many years, and some analysts said the removal of the limit might be good news for those institutions.
However, Mr. Mei holds that this opening-up would have little impact on China's current payment industry landscape.
"Domestic payment behemoths have already led their foreign rivals in this industry, especially in mobile payments, so it is hard for foreign-funded companies to grab too many shares," said Mr. Mei to the journalist.
However, Mr. Dong predicted that a new business model might be introduced by foreign-funded payment institutions in order to survive, for example, they might focus on the high-end market or enhance cooperation with domestic payment institutions.
Private information should be protected
According to the announcement, payment institutions would be equally treated no matter whether they were domestic or foreign-funded. However, regulators will hold on to their rules to avoid risks and ensure information security.
Moreover, foreign-funded payment institutions should abide by China's laws and regulations on daily operations, risk management, funds disposition and among others.
Mr. Mei said a requirement was needed to protect Chinese users' private information and it would be the same with other industries related to big data.
"I think China should ensure information security when introducing foreign-funded payment institutions and especially avoid information leaking issues," he said.
To introduce competition
The move showed not only China's confidence in its payment industry to be involved in the international competition, but also its resolve to accelerate the self-improvement of its domestic payment platforms through market openness, Mei Xinyu, a researcher from the Chinese Academy of International Trade and Economic Cooperation, told this journalist.
"The market is bound to be opened up rather than under protection. The competition will urge domestic payment companies to constantly improve themselves," he said.
Dong Ximiao, a senior researcher from the Chongyang Institute for Financial Studies of the Renmin University of China, holds similar views.
"Foreign-funded payment institutions when introduced are theoretically expected to break the current highly monopolistic pattern in the domestic payment market, especially in the non-banking payment market," he said to the journalist.
Hard to change overall landscape
China's payment industry had witnessed a rapid growth since 2010 when the licensing system was established.
From 2013 to 2017, the business volume of the payment institutions had surged by about 8.6 times from 37.1 billion to 319.3 billion transactions, with its value soaring from RMB 18 trillion to RMB 169 trillion.
The compound annual growth rate of the volume and value had increased by 71 percent and 75 percent respectively, according to the central bank.
Foreign-funded payment institutions like PayPal have been coveting the cake for many years, and some analysts said the removal of the limit might be good news for those institutions.
However, Mr. Mei holds that this opening-up would have little impact on China's current payment industry landscape.
"Domestic payment behemoths have already led their foreign rivals in this industry, especially in mobile payments, so it is hard for foreign-funded companies to grab too many shares," said Mr. Mei to the journalist.
However, Mr. Dong predicted that a new business model might be introduced by foreign-funded payment institutions in order to survive, for example, they might focus on the high-end market or enhance cooperation with domestic payment institutions.
Private information should be protected
According to the announcement, payment institutions would be equally treated no matter whether they were domestic or foreign-funded. However, regulators will hold on to their rules to avoid risks and ensure information security.
Moreover, foreign-funded payment institutions should abide by China's laws and regulations on daily operations, risk management, funds disposition and among others.
Mr. Mei said a requirement was needed to protect Chinese users' private information and it would be the same with other industries related to big data.
"I think China should ensure information security when introducing foreign-funded payment institutions and especially avoid information leaking issues," he said.
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