The third-party payment provider, Zhongbai Payment (中百支付), was fined 400,000 yuan by the central bank on October 29th. Zhongbai Payment received the fine for failing to perform its customer identification obligations and keeping customer identification information and transaction records as required. Zhongbai Payment was established in 2000 and obtained a payment license in 2013 allowing it to engage in the issuance and acceptance of prepaid cards in Hubei Province.
In a speech at the Sibos banking and financial conference on October 2nd, Fan Yifei, a deputy governor at the central bank, said that China’s sovereign digital currency (DCEP), had already been used for more than 1.1 billion yuan (US$ 162 million) worth of transactions. As of late August, 3.13 million transactions had been processed using the currency, which has been undergoing tests for much of the past year in major cities, such as Shenzhen and Xiongan. Pilots also will be conducted at the coming Winter Olympics in 2022. Fan said that the “PBOC regards digital renminbi as an important financial infrastructure for the future.”
On October 23rd, YinSheng E-Pay (银盛支付) successfully completed its system docking with Express (Hangzhou) Technology Services Co., Ltd. (连通（杭州）技术服务有限公司), the Chinese joint venture (JV) launched by American Express. YinSheng E-Pay will now be able to provide clearing services for the renminbi transactions of American Express. In June, the PBoC and the China Banking and Insurance Regulatory Commission (CBIRC) approved the JV’s application to become a bank card clearing organization. YinSheng E-Pay is one of the JV’s first batch partners. YinSheng E-Pay will now upgrade its merchant terminals to ensure that merchants can accept payments from American Express’ renminbi credit cards.
On October 25th, Mu Changchun, head of the PBoC’s digital currency research institute, said that digital currency is a form of M0 money supply and will be able to be exchanged for free at commercial banks. The PBoC will set up a free-of-charge digital yuan exchange system and will not charge distributors for exchange and services. In addition, Mu also emphasized at the recent Bund Summit in Shanghai that China’s digital currency would not compete with WeChat Pay and Alipay as these are wallets, while the digital yuan is the money in the wallet.
Recently, China’s central bank fined six state-owned bank branches a combined RMB41.88 million (USD6.3 million) for infringement of consumers’ personal information rights as the country introduces its first national legislation on the protection of personal data. The penalties show that some financial institutions have insufficient awareness of the protection of consumer rights and interests. The six bank branches are four branches of China Construction Bank, a branch of Bank of China, and a branch of Agricultural Bank of China.
On October 19th, ZA Bank officially announced the launch of ZA Card, which is the first Visa card with a customized card number in Hong Kong. The biggest feature of ZA Card is that it supports the customized 6-digit card number. In addition, there is no CVV, validity period, and signature information on the physical card, which reduces the risk of embezzlement. ZA Bank is one of the first batch of banks to obtain a virtual bank license issued by the Hong Kong Monetary Authority.
The Monetary Authority of Macao announced that the Hong Kong Dollar Real-time General Settlement System (澳门港元即时支付结算系统), which was launched on October 19th, recorded a total of HKD9.4 billion worth of transactions occurring in a single day. The system is currently being used by 28 local banks. Most large-sum transactions in Macau are settled in Hong Kong dollars. The system was built to support immediate settlement services for interbank fund transfers in the neighboring region’s currency.
On October 20th, the Digital Currency Research Institute of the People’s Bank of China (PBoC) signed a strategic cooperation agreement with the Rural Credit Banks Funds Clearing Center (RCBFCC) (农信银资金清算中心), for digital currency application projects in China’s rural areas. The PBoC has said that it will seek to drive digital renminbi-related operations in rural communities, and make full use of pre-existing networks and systems. Meanwhile, the RCBFCC will provide combined online services via digital renminbi connection platforms to rural village credit unions, rural village commercial banks, and county banks.
As China’s consumer loans shrink at an unprecedented pace after a decade of breakneck expansion, China UMS (银联商务), a provider of nationwide payment services under China UnionPay, has decided to suspend its consumer loan business. With China UMS planning to list on the Shanghai Stock Exchange’s Nasdaq-style STAR market, the move was made in order to adjust the stability of its credit business and enhance its capital valuation.
China’s top security regulator, the China Securities Regulatory Commission, approved the Shanghai leg of Ant Group’s initial public offering, the final regulatory hurdle for what is likely to be the world’s biggest IPO ever. The Chinese fintech giant revealed plans to simultaneously list in Hong Kong and Shanghai in a likely US$35 billion duel listing. The Shanghai leg could raise up to US$ 17.3 billion. Ant plans to sell up to 1.67 billion shares in the Shanghai float, which is set to be the biggest IPO in China.
On October 20th, Ping An Bank partnered with JD Digits to establish a co-branded credit card-Ping An Baitiao Card (平安白条卡). The two parties announced that they would expand cooperation in corporate finance, wealth management, smart marketing, and risk control. The Ping An Baitiao Card allows users to consume online and offline outside the JD ecosystem. In addition, compared to JD Digits’ initial internet credit product – Baitiao, launched in 2014, the new Ping An Baitiao card provides users with a higher credit limit and longer interest-free period.
On October 15th, Postal Savings Bank of China (PSBoC) signed a comprehensive strategic cooperation agreement with JD Digits in Beijing to jointly promote digital transformation of the financial sector. As a national commercial bank, the PSBoC has nearly 40,000 business outlets and serves more than 600 million individual customers. According to the agreement, the PSBoC and JD Digits will promote joint credit cards, digital marketing, consumer credit, and electronic payments in the field of personal finance and asset management.
On October 13th, the PBOC drew up draft measures for a guarantee fund to enhance the long-term stability of nonbank payment institutions. The PBOC said that setting up of the fund is necessary as a lack of supporting relief protection introduces risks and affects social stability when institutions are shut down due to major violations or mismanagement. The fund will mainly comprise of interest accrued from customer reserves, with nonbank payment institutions to contribute between 9.5% and 12%, depending on individual classification and rating. Contribution to the fund may be suspended if the size of the fund reaches 1 billion yuan. The fund will be managed in a special account and may be overseen by a nonprofit organization appointed by the central bank.
On October 11, the General Office of the State Council issued the "Implementation Plan for Building a Pilot Demonstration Zone of Socialism with Chinese Characteristics in Shenzhen (2020-2025)" The "Implementation Plan" proposes to expand the opening up of the financial industry, and supports qualified foreign institutions to obtain payment business licenses in Shenzhen. This move is aimed at attracting foreign institutions to settle in Shenzhen for investment and to further promote competition in the payments market, especially in cross-border payments.