The Chinese central bank is advancing efforts to streamline the domestic payments sector with the cancellation of an increasing number of licenses.
The People’s Bank of China (PBOC) recently announced the official cancellation of the payments licenses of 17 companies in China. The move increases the number of cancellations to 68 in total, after licenses previously hit a peak of 271.
10 of the licensees saw their licenses cancelled after they refrained from submitting applications for extension within the relevant timeframe, while another six licensees actively withdrew from their licenses. PBOC also took the step of refusing to extend the payments license held by Huitong Baoyin (汇通宝因) for failure to comply with regulatory conditions.
Out of the 17 payments companies whose licenses have been cancelled, 14 were involved in the issuance or processing of pre-payment cards. Wang Pengbo (王蓬博), financial sector analyst with Botong Consulting (博通咨询) said to state-owned media that the main reason for this is the rise of mobile payments, which has undermined the commercial viability of the cards.
Chinese authorities are expected to continue to maintain close regulatory scrutiny of the payments sector, as well as the broader fintech and financial sectors.
On 22 June the Central Comprehensively Deepening Reform Commission (CCDRC) approved the “Work Plan for Strengthening Large-scale Payments Platform Enterprise Regulation and Expediting the Standardized and Healthy Development of Payments and Fintech” (强化大型支付平台企业监管促进支付和金融科技规范健康发展工作方案).
CDDRC called for “comprehensively including the payments and other financial activities of [Internet] platform enterprises within regulation, making service of the real economy the fundamental priority, upholding licensed financial operations, and improving regulatory systems and risk control systems in the payments sphere.”
Wang Pengbo said that stronger regulation could held to foster more rapid development of the Chinese payments sector in future.
“The constant refinement of regulatory measures increases the threshold for entry into the payments sector,” he said. “This means that in future the sector will place greater emphasis on assets, standards and regulation, which will be of benefit to the long-term development of the sector, and give vigorous support to payment sector innovation.”