On September 1, 2010, China Central Bank(CCB)’s regulation Administration Measures for Payment Service by Non-Financial Institutions(Payment Services Rules) takes effect.  According to the Payment Service Rules, non-financial institutions must obtain the License of Payment Services (License) from the CCB before engaging in payment and settlement services within the territory of China. To obtain the License, the non-financial institution applying for the License ("Applicant") shall meet the strict requirements that the CCB establishes according to the principle of prudence, including 1) the registered capital of the Applicant that applies for operating nationwide payment services shall not be less than RMB100 million; 2) the Applicant shall operate its business for more than three years; and 3) the main investor of the Applicant shall have provided information processing support services to financial institutions or e-commerce businesses for more than two consecutive years, have generated profits for more than two consecutive years, and have not been subject to any penalty for engaging illegal or criminal activities by utilizing payment services or for providing payment services for illegal or criminal activities in the past three years.


The above requirements imply that the Applicant will be unable to establish a new enterprise to engage in third party payment business. In practice, only a smaller number of enterprises are eligible to apply for the License to provide payment services across the country, including, and


The Payment Service Rules are silent on whether or not foreign investment in payment and settlement organizations are permitted and the permitted percentage of foreign investment. Instead, the Payment Service Rules only generally provide that the business scope of foreign-invested payment service providers, the qualifications of the foreign investors, and the restriction on foreign shareholdings in such businesses shall be subject to rules to be established by the CCB and the approval of the State Council.


In summary, foreign invested payment service company is not impossible to be set up in China, since there are several existing such companies running very well in China. However, the company cannot be wholly foreign owned enterprise, but a joint venture. Hence, you have to find an existing payment service provider as your partner. If you do want an access to China market in this way, then alternatively, you can look for some solutions in Hong Kong. But Hong Kong based companies or banks are also treated as “foreign” in Mainland China. Even if you set up a company in Hong Kong and plan to solicit business in Mainland China, you will face the same issue- you have to apply for a License to be allowed to do this business in Mainland China.

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