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FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.
For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.
Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.
Introduction
Attitude of the country towards modern payment services
In China, other than traditional payment services which are mainly provided by banks, modern payment services, such as WeChat Pay or Ali Pay etc., have developed rapidly, and been deeply integrated into people’s life in the past decade. Not only do they cover the commercial sector such as restaurants, stores, and entertainment venues, but also include non-profit institutions and facilities such as buses, subways, and medical hospitals etc., and have been available in China and abroad. The PRC government has been supporting the development of modern payment services continuously. However, since the payment service is a kind of finance service, the strict entry thresholds and regulatory system are also imposed on the payment service providers. The modern payment service providers must have a special license to be engaged in such service and shall comply with the detailed and comprehensive regulatory requirements continuously.
Legal affairs
Obligations and requirements to provide payment services or ancillary services described above
In general, the payment service providers can be either financial institutions or non-financial institutions, provided that such service providers satisfy the relevant requirements and hold the proper payment service license. With respect to the payment service in FinTech, non-financial institutions which hold payment service license take the key roles in this area.
First of all, any entity engaged in the payment service activity shall obtain a payment license issued by the People’s Bank of China (PBOC). Depending on the scope of payment services to be engaged, PBOC has set different requirements for the minimum registered capital of the license’s applicants. For engagement nationwide, the minimum registered capital is RMB100 million (equivalent to approximately USD15.7 million or EUR14.2 million ), while for engagement within a province (autonomous region or municipality directly under the Central Government) is RMB30 million (equivalent to approximately USD4.72 million or EUR4.26 million). After obtaining the payment license, the payment institution should keep a good operating record. In case of: (i) the accumulated losses exceeding 50% of its paid-up capital; (ii) series operation risk; and (iii) series violation of laws and regulations, PBOC may suspend/stop the business operation of the payment institution.
The government encourages foreign institutions to participate in the development and competition of China's payment service market. In 2019, PayPal has acquired a Chinese payment institution and became the first and currently only 100 % foreign-owned payment institution in China.
Secondly, as FinTech relies heavily on the Internet to provide services/information/content, an ICP (Internet Content Provider) license issued by telecommunication authority is required. Please note that most of the ICP license are subject to the foreign investment restriction – i.e. the foreign shareholding ratio of the applicants shall be no more than 50% and shall satisfy other requirements (such as experience in telecommunication service area etc.). <