development of retail payment services in...

Development of

Retail Payment Services in China

CHEN Xue

Payment and Settlement Department

The People’s Bank of China

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Agenda

Major Measures and Achievements

Further Outlook

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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)

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retail payment service providers

Retail Payment Service Providers

PBC Banks Clearing

Institutions

Payment

Institutions

Retail Payment Service Providers

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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


(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

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(cont.) Difference between BEPS and IBPS

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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


(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

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(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

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(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

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II. Fostering the use of non-cash

payment instruments

Bills

Bank Cards

Bills

Bank Cards

Electronic

Payments

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payment instruments (cont.)

Volume

(Billions)

Value

(Trillions in CNY)

Cheques 0.75 270

Bankcards 38.9 350

Electronic Payments 19.2 823

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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



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.



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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

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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

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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

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Agenda

Major Measures and Achievements

Further Outlook

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Further Outlook

I. Supervision over PIs

II.Cyber security

III.Mobile Phone Payment

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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

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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

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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

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Thanks!

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