Cards,China,retail,Risk and Regulation,

Cards,China,retail,Risk and Regulation,

In order to carry out the Decision of the State Council on Implementing Entry Administration of Bank Card Clearing Institutions (Guo Fa [2015] 22, hereinafter referred to as the Decision), promote the opening-up of the bank card clearing market in an orderly manner in accordance with the laws and regulations, standardize the administration of the bank card clearing institutions, and improve the healthy development of the bank card clearing market, the People’s Bank of China together with the China Banking Regulatory Commission (CBRC) lately issued the Administrative Rules on Bank Card Clearing Institutions (No. 2 [2016] of the People’s Bank of China and the China Banking Regulatory Commission, hereinafter referred to as the Rules). The Rules shall come into force as of the date of promulgation.

As a detailed implementation regulation of the Decision, the Rules follows the basic principles of encouraging competition, promoting market openness, guarding against risks, upholding financial safety, and safeguarding the legitimate rights and interests of bank card holders and relevant parties, which will further improve the basic laws and regulations system in areas of market openness and entry of institutions. The promulgation and implementation of the Rules would contribute to the cultivation of a market environment where fair competition exists in the bank card industry, enhance bank card clearing services, build a sound industrial ecosystem, and boost the continuous and stable development of the industry as a whole and all parties concerned. The Rules also gives impetus to the reform and opening-up and innovative transformation of the payment service market in China, and gives full play to the active role of bank cards in stimulating household consumption and promoting economic growth.

The Rules refines the terms of the Decision of the State Council on entry administration of bank card clearing institutions, makes clear requirements on application materials and procedures in the process of preparation, opening, institutional changes and business termination of bank card clearing institutions, exerts qualification management on board of directors and senior managers of bank card clearing institutions, improves the market entry system of bank card clearing institutions, and makes sure institutions, which are qualified and have the ability to maintain stable operation, are allowed to enter the market. The Rules also elaborates supervisory requirements on foreign institutions, which offer foreign currency-denominated clearing services for cross-border transactions, and do not establish institutions within China. Besides, the Rules stipulates explicitly that foreign institutions should obey relevant management requirements and fulfill the reporting obligations as well. In the meantime, the Rules identifies that if the services provided by foreign institutions have a significant impact on the stable operations of the bank card clearing system in China or on public confidence in payment, they should establish institutions in China and apply for market entry in accordance with the law.

According to the business focus and the operational model of bank card clearing institutions, the Rules puts forward specific requirements on the establishment of institutions, business specialization, transaction processing, information transmission, capital clearing, infrastructure management, financial information security, anti-money laundering and anti-terrorist financing. These requirements will help to maintain the independency of bank card clearing institutions in the bank card industry, ensure the safe, stable and efficient operation of the business infrastructure, guard against business and operational risks, and guarantee personnel information security and national financial security. The Rules further specifies relevant requirements on bank card clearing brands, business rules and technical standards in order to safeguard the uniformity, safety, stability and continuity of the bank card clearing services, protect the legitimate rights and interests of all parties involved in the bank card clearing business.

The CBRC will conform to the principles of openness, fairness, and impartiality in its next move, cooperate with the People’s Bank of China in market entry review in accordance with the laws, facilitate technological innovation of bank card clearing institutions, improve service and risk-proof capability, encourage the healthy and orderly development of the bank card industry, and better serve people’s livelihood and economic development.

Re-disseminated by The Asian Banker