As non-bank payments firms rapidly emerge, China has instituted rules for these services to make payments to the state. The measures were revealed on December 6, 2019 and come into effect on January 6, 2020. As part of the process the People’s Bank of China has provided additional guidance for payees and institutions facilitating these payments. To quote the PBoC:
“… it is necessary to formulate regulations to regulate relevant businesses so as to eliminate potential risks. In addition, the deepening of the taxation administration system reform has, in practice, called for the release of relevant regulations, which could safeguard the legitimate rights and interests of payers while making it more convenient to make payment. The release of the Measures helps to regulate businesses of non-banking payment institutions, commercial banks and clearing institutions in providing payment services for intermediary receipt of the State Treasury, ensure the security of treasury funds, and safeguard the legitimate rights and interests of payers. It is significant not only for winning the tough battle of preventing and defusing major financial risks, but also for facilitating the people’s daily life.”
Online payment services have become very popular in China to the point the government is now accepting payments from these non-bank institutions through the network that directly connects commercial banks or clearing institutions to the State Treasury. Only highly rated firms will be allowed to make direct payments to the State Treasury.
