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Development of
Retail Payment Services in China
CHEN Xue
Payment and Settlement Department
The People’s Bank of China
3
Major Measures and
Achievements
I. Operation of retail payment systems
II. Fostering the use of non-cash payment
instruments
III. Strengthening supervision over non-financial
institutions (NFIs)
3
retail payment service providers
Retail Payment Service Providers
PBC Banks Clearing
Institutions
Payment
Institutions
Retail Payment Service Providers
5
I. Operation of retail payment systems
5
Internet
Banking
Payment
System
Intra-bank
Payment
Systems of
Banks
Inter-bank
Bankcard
Clearing
System
Local
Clearing
Systems
Bulk
Electronic
Payment
System
Cheque
Image
System
Payment and
Clearing Systems
serving rural
financial institutions
Operated by PBC
I. Operation of retail payment systems
(cont.) BEPS operated by PBC
7x24, sending payment instructions in bulk, netting in real time and settling regularly
Maximum amount of credit transfer: RMB 50,000, without any maximum amount of debit transfer
Total volume exceeding 750 million and total value approaching CNY 19 trillion in 2012
IBPS Operated by PBC
7x24, sending payment instructions and netting in real time; settling regularly
maximum amount of credit transfer and debit transfer are the same: CNY 50,000
Total volume nearly 250 million and total value over CNY 3.5 trillion in 2012
6 6
I. Operation of retail payment systems
(cont.) Difference between BEPS and IBPS
7 7
difference BEPS IBPS
major instructions traditional payments on-line payments
maximum amount of debit transfer
no maximum amount CNY 50,000
sender's experience
Information on the specific branches of the
bank is required
Only the information on the legal institution
is enough
can't obtain processing results
obtain processing results in real-
time
bank's access mode branches of the bank can access as participants
only the legal institutions of the bank can access as
participants
I. Operation of retail payment systems
(cont.) CIS Operated by PBC
7x24, settlement processed by BEPS
Transmitting images among participants
Total volume exceeding 11 million and total value over CNY 545 billion in 2012
LCS operated by PBC
Conducting centralized exchange and netting of local paper-
based instruments
Total volume nearly 400 million and total value over CNY 66
trillion in 2012
8 8
I. Operation of retail payment systems
(cont.)
Inter-bank Bankcard Clearing System operated by
China UnionPay Co. Ltd
Settlement through High Value Payment System
Total volume over 8 billion and total value nearly CNY 20
trillion in 2012
Payment and clearing systems serving rural financial
institutions, operated by Clearing Center for City
Commercial Banks and Rural Credit Banks Funds
Clearing Center
9 9
I. Operation of retail payment systems
(cont.) Intra-bank Payment Systems of Banks
Centralized data processing;serving the public directly
Total volume nearly 9 billion and total value over CNY 600
trillion in 2012
10
11
II. Fostering the use of non-cash
payment instruments
Bills
Bank Cards
Bills
Bank Cards
Electronic
Payments
11
12
II. Fostering the use of non-cash
payment instruments (cont.)
Volume
(Billions)
Value
(Trillions in CNY)
Cheques 0.75 270
Bankcards 38.9 350
Electronic Payments 19.2 823
12
cash withdrawal through bankcards in rural area where
lack basic financial infrastructure
the bankcard acquiring institutions set up accepting terminals
at designated village merchants through which the card
holders can withdraw money in low value with debit cards
and inquire the subsidiaries
II. Fostering the use of non-cash
payment instruments (cont.)
Commercial banks such as Agricultural Bank of China (ABC)
improve rural payment service environment through non-cash
payment instruments
innovate payment instruments and services related to agriculture, rural areas
and farmers and install ATMS, POS terminals and transfer telephones in the
countryside
Launch the huinong card acceptance program, Huinong Cards are not only
accepted in all the outlets and ATMs of ABC, but also in all the ATMS or POS
terminals with logos of China UnionPay.
Besides the basic functions of cash deposit and withdrawal, transfer , the
Huinong Cards also provide special services such as passbook, the carrier of
issuing small loans to the rural households, ID of social security and medical
insurance for rural people and means of relevant collection and payment, and
payment of public utilities fees and fiscal subsidies in rural areas.
II. Fostering the use of non-cash
payment instruments (cont.)
15
II. Fostering the use of non-cash
payment instruments (cont.)
15
Bank card
related
rimes
the PBC and The Ministry of Public Security (MPS) carried out
the bankcard crime crackdown campaign to crack down on
bankcard crimes and protect the property and interests of the
general public. The MPS and the PBC jointly established a
leadership team and formulated an enforcement plan for the
campaign.
Bankcard Crime Crackdown Campaign
IV. Strengthening supervision over
NFIs
NFIs-emerging market players
Playing a complementary role
Facing with new problems
Administrative Measures on Payment Services Provided
by Non-financial Institutions issued by PBC in 2010
16
17
II. Innovation of payment services
provided by payment institutions (PIs)
Innovated payment network
Internet: Open-ended; remote access;flexible choices
of terminals
Innovated payment services and products
Diversified, differentiated, personalized
PIs Internet Customers
17
18
II. Supervision over PIs strengthened
Granting administrative approval
223 payment institutions
Formulating regulations and rules
Administrative Measures on Prepaid Cards issued by
Payment Institutions released last year
Promoting self-regulation of the industry
18
21
I. Supervision over PIs
Safeguarding clients’ funds
Consolidating profound legal basis and
enhancing supervisory efficiency
Encouraging legitimate innovation
Conducting overall planning of supervision over
legal entities and their branches
Performing research and investigations
21
22
II. Cyber security
Fraud risks of payment via internet are much bigger
compared with traditional payment channels. How to tackle with the problem ?
EU Practice- recommending payment service providers
To perform thorough evaluation of risks and effectiveness of
safety measures annually
To set up the mechanism for reporting malfunction
To establish authentication rules
Log-in trial limit, overtime log-out, time limit for identification
22
III. Mobile phone payment
Drawing much attention
Modes in exploration
Binding phone numbers with bank A/C or cards
Opening accounts in the name of SIM card holders
Adding E-wallet function to SIM card
Close cooperation among relevant parties
23