Non-cash Transactions Surge in China’s Payment Sector

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A new report issued by the Payment & Clearing Association of China indicates that non-cash payments are witnessing flourishing growth in the Middle Kingdom.

According to the “The China Payment and Clearing Sector Operations Report (2017),” the total number of non-cash payment transactions performed in China leaped by 32.64% last year to reach 124.1 billion.

The total value of these non-cash payment transactions posted a year-on-year gain of 6.91% to reach 3687.24 trillion yuan.

PCAC vice-secretary Wang Suchen points to a major shake-up in the payments sector which is heavily affecting the use of cash.

“China is the same as the rest of the world, with bank card payments occupying the dominant position, check payments on the decline, and mobile payments emerging as key growth points,” said Wang.

According to Wang the rapid spread of non-cash payment methods such as mobile payments using barcodes as well as an increase in direct card payments is curbing the use of cash.

While the penetration rate of bank cards in China is on a steady upwards trajectory, cash withdrawal operations are posting negative growth.

In 2016 there were a total of approximately 18 billion cash withdrawals made using bank cards across China, with a total value of 65.5 trillion yuan. These figures represent year-on-year declines of 2.3% and 10.46% respectively.

The report also points to a marked decline in the use of negotiable instruments。

“In 2016 negotiable instrument operations saw an expansion in their decline compared to the previous year,” said the report. “Checks, settled commercial bills, bank drafts and banker’s promissory notes all displayed a downward trend.”

Tough regulations set to curb non-bank

The report expects regulation of the payments sector to intensify this year, particularly given the flourishing growth of the fintech sector.

Authorities will focus in particular on illegal conduct in relation to consumer information disclosure and deposit risk.

As of January 2017 China’s central bank had meted out penalties to 239 entities that illegally engaged in payment operations, fining 13 that had breached regulations on customer deposits, as well as cancelling the operating licenses of three companies.

In addition to the ratcheting up of regulations, the report expects a tighter leash on license issuance by the People’s Bank of China to curb the number of non-bank players in the payments sector.

“Because of factors including cancellations, active applications for cancellation, inability to continue operation and mergers, non-bank payment sector organisations will shrink to 255 following industry adjustments.”

 

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