Move expected to raise domestic services standards
The People's Bank of China (PBOC), the country's central bank, announced on Wednesday that access restrictions for foreign third-party payment firms will be lifted in order to promote a new overall opening-up pattern.
According to a statement on the central bank's website, foreign payment firms that want to provide digital payment services in China should obtain licenses based on domestic regulations for non-financial payment institutions, which were rolled out in 2010.
Lifting the access restrictions, treating domestic and foreign capital equally and realizing unified access standards as well as regulation requirements will be helpful for further optimizing the payment industry structure and enhancing services, the PBOC said.
In China, the number of transactions handled by third-party payment firms rose from 37.1 billion in 2013 to 319.3 billion in 2017, with the value surging from 18 trillion yuan (.84 trillion) to 169 trillion yuan, up 71 percent and 75 percent, respectively, data from the PBOC showed.
"Some big payment firms in China have gone global to provide their services, and more and more foreign payment institutions have expressed their hope of entering the Chinese market amid the country's opening-up," it said.
Dong Ximiao, a research fellow with the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Wednesday that the move is a milestone in China's further opening-up of its financial sector.
"There is an imbalance between Chinese payment institutions' overseas expansion and foreign firms' tapping of the domestic payment market. The opening-up to foreign competitors will narrow the gap, and improve the services standards of domestic third-party payment institutions like Alipay and Tenpay," he explained.
"The Chinese non-financial institutions have lower transaction fees than foreign peers, but their dominant market positions have sometimes hurt users' interests," Dong explained.
For example, Alipay and Tenpay have each started to charge a withdrawal fee when users reach the free quota they are allowed to have, he said, noting that the inflow of foreign rivals will challenge domestic firms' position and raise their operation to the international level.
The PBOC statement also said that foreign companies will be required to store, process and analyze clients' data in the Chinese mainland to guarantee a safe and normalized business system.