The central bank aims to develop a defense fund for a non-bank payment security pad.

Saturday, October 17, 2020, 15:16 GMT

Economic Observer reporter Wan Min On October 13, the Central Bank issued the “Administrative Measures for Industry Guarantee Funds for Non-bank Payment Institutions (Draft for Comment).”

  The central bank stated that payment institutions serve hundreds of millions of customers, involving customers’ provision of 1.5 trillion yuan, set up funds, and regulate their operations through the “Measures” to ensure that payment institutions encounter a risk event when there is a provision gap, to minimize The impact of its customers.

  According to this consultation draft, the central bank intends to transfer the liquidation margin interest of non-bank payment institutions to the fund in proportion, and the accrual ratio is determined according to the classification and rating results of the payment institutions, with a range of 9.5% to 12%, as the main protection fund Sources of funds.

  Industry insiders believe that this is another powerful measure to ensure payment security and promote the development of industry standards after the central bank requires third-party payment to deposit full customer reserve funds.

  Prevent third-party payment “explosion”

  The central bank stated, “In recent years, with the rapid growth of non-bank payment institutions (hereinafter referred to as payment institutions) business, the scale of customer reserve funds has also continued to expand, and risk incidents of misappropriation of customer reserve funds by payment institutions have occurred from time to time, which is critical to the development of the industry. And financial stability. In addition, some payment institutions have their “Payment Business Permits” cancelled due to major violations, poor management, etc., when they are dissolved or bankrupt, due to the lack of supporting relief and protection mechanisms, if there is a gap in the provision of their customers , It is very easy to cause group incidents and affect social stability.”

  Su Xiaorui, a senior researcher at the Sack Research Institute, told reporters that the purpose of the new regulations is to strengthen the management of payment institutions’ reserve funds, which has two functions. One is to mitigate risks and enhance the risk resistance of payment institutions; the other is to protect Rights and interests, especially the legal rights and interests of natural person customers and small, medium and micro-designated merchants

  In the recent period, the central bank’s governance of the third-party payment industry has maintained a high-pressure situation, and large fines have been issued frequently. On October 10, the Business Management Department of the People’s Bank of China (Beijing) disclosed on its official website that in the first half of this year, focusing on the main theme of “strict supervision and normalization”, it took multiple measures to address issues such as weak compliance awareness and serious violations of laws and regulations by some payment institutions in the jurisdiction. Simultaneously, intensified investigation and punishment, warnings were given to six payment institutions within the jurisdiction, including Commercial Bank and Sina Pay, and a total of 178 million yuan was fined; 8 relevant persons in charge were warned and fined a total of 2.422 million yuan. Among them, Commercial Bank of China received the largest fine from domestic payment institutions, with a total amount of 116 million yuan. The main reasons for the fine were related to the direct provision of payment and settlement services for illegal fund-raising platforms, violation of T+0 fund settlement service management regulations, misappropriation of reserve funds, failure to carry out centralized deposit of reserve funds in accordance with regulations, etc., as many as 16 violations of laws and regulations item.

  According to the explanation of the “Customer Reserve Fund Deposit Management Measures for Payment Institutions,” customer reserve funds refer to the monetary funds received in advance by payment institutions to handle payment services entrusted by customers.

  In the first few years of the development of the third-party payment industry, the storage and management of reserve funds was disorderly and opaque. Some third-party payment institutions embezzled the reserve funds and took interest on the reserve funds, which caused many market disputes. . In 2013, the Central Bank promulgated the “Measures for the Deposit and Management of Customer Reserve Funds of Payment Institutions”, which established the classification of reserve funds and hierarchical management of accounts, closed operation and use of funds, multi-party verification of reserve information, and dynamics of important regulatory indicators Adjust and supervise a series of regulatory systems including the government, self-regulatory organizations, and commercial banks in cooperation to fully regulate the deposit, collection, use, and transfer of customer reserve funds. Starting from January 2019, payment institutions have fully deposited customer reserve funds to the People’s Bank of China.

  Wang Zhaoyu, who has long been concerned about the data governance of regulatory technology, believes that the convenience of non-bank payment (or third-party payment) institutions to provide online payment is essentially to obtain zero interest or low interest, large, long-term funding from customers, and use it as a Capital, to win jet lag gains in currency or capital markets. Since the basic business logic is like this, it faces the same liquidity risk as banks.

  The central bank stated that “centralized depository of reserves can effectively curb the risk of misappropriation of funds, but it cannot prevent false merchants and fraudulent transactions in the operation of payment institutions, nor can it completely prevent illegal trading platforms from infecting payments. Funding risks caused by institutions.”

  A senior person in the payment industry told reporters that it is almost an open secret that a large number of third-party payment companies in the industry provide payment channels for illegal gold, foreign exchange, and gaming industries. Some companies are unable to effectively identify these packages as platforms for normal merchants due to technical problems and provide payment services, while others are motivated by profits and proactively provide cooperation opportunities.

  In 2015, Zhejiang Yishi Enterprise Management Service Co., Ltd. was canceled by the central bank for major violations such as misappropriating customer reserve funds, falsifying transactions and financial information, and operating payment services beyond the scope, and became the first in China. A third-party payment company whose payment license has been cancelled. As of September 2019, according to incomplete statistics, the central bank’s cumulative cancellation of payment license list has increased to 34. The reasons for cancellation include: mandatory cancellation of payment business violations, cancellation of business mergers, and voluntary cancellation of payment services.

  On October 16, the relevant person in charge of Didi Payment told reporters that the guarantee fund is an important safeguard measure expected by the entire industry, and it is also an important sign that the supervision of the payment industry is becoming more perfect. The guarantee fund provides an important guarantee for the rights and interests of financial consumers. Under certain special circumstances, the rights and interests of financial consumers can be better protected. The emergence of safeguard funds and the centralized deposit of reserves have formed a two-pronged regulatory role, which not only effectively curbs the risk of misappropriation of reserves, but also effectively eliminates false transactions in the daily operations of payment institutions.

Inject into the protection fund on a quarterly basis

 According to this consultation draft, the payment institution will use all customer reserve funds as its liquidation deposit. The People’s Bank of China accrues the interest on the settlement deposit of payment institutions on a quarterly basis and transfers it to the fund. When the accrued liquidation margin interest will exceed 1 billion yuan, the accrual ratio shall be adjusted to ensure that the fund scale after this accrual reaches 1 billion yuan. The accrual ratio is determined according to the classification and rating results of payment institutions. Those rated as “A”, the accrual ratio is 9.5%; those rated as “B”, the accrual ratio is 10%; those rated as “C”, the accrual ratio is 10.5%; they are rated as “D” For the category, the accrual ratio is 11%; for the category “E”, the accrual ratio is 12%.

  According to the “Administrative Measures for the Online Payment Business of Non-Bank Payment Institutions”, the six basic evaluation indicators of category A institutions are overall excellent; category B institutions have a good overall performance, and individual indicators are generally realized; the basic indicators of category C institutions have a general performance, and some indicators have problems; Type D institutions have greater potential risks; Type E institutions have serious risks.

  In other words, “high-quality students” in payment institutions pay less, and “poor students” pay more. Su Xiaorui believes that the ratio of liquidation margin provision is determined according to the AE-level rating results of payment institutions, which reflects the direction and thinking of the supervision and classification of policies in recent years. The total amount of the fund reaches the 1 billion upper limit in the suspension of accrual of more than 1 billion yuan, and the upper limit of fund management fees of 2% of the average daily balance of the fund, which will help alleviate the pressure on the compliance cost of payment institutions.

  A person in the third-party payment industry said that a large number of small payment companies at the end of the industry are struggling to survive. The central bank’s supervision is becoming more and more stringent. Payment companies with low market share and undeveloped brands have a narrower living space and regulatory fines. Higher and higher, many non-compliant businesses in the past, now fewer and fewer companies dare to try the law.

  According to the draft, in one of the following circumstances, the fund can be used to reimburse the customer’s reserve fund with the approval of the People’s Bank of China: When a payment institution is cancelled, its “Payment Business Permit”, is dissolved, or is declared bankrupt according to law, the payment institution Or the assets of other responsible entities cannot fully cover the gap in the customer’s provision; the payment institution has major risks and cannot make up for the gap in the customer’s provision by various market-oriented methods; other parties identified by the People’s Bank of China may seriously endanger the public interest And financial stability.

  However, for customers of third-party payment institutions, it is still important to note that the central bank’s draft for comments stated that if funds are used to redeem the customer’s reserve, a maximum redemption limit of RMB 5,000 is imposed on a single customer. The People’s Bank of China may adjust the maximum redemption limit based on factors such as economic development and the risk status of the payment industry.

  Choosing a well-qualified and well-managed third-party payment institution for business cooperation is still the homework that merchants and individual users need to do.

  Up to now, my country has issued 9 batches of payment business licenses for non-financial institutions, and there are more than 200 companies that hold third-party payment licenses. According to Analysys’s comprehensive payment market share statistics for the first quarter of 2020, Alipay, Tencent Finance and UnionPay Commerce ranked the top three with market shares of 48.44%, 33.59% and 7.19% respectively. The total market share of the three reached 89.21%.

  Su Xiaorui believes that for the payment industry, the new regulations clarify the rights and responsibilities of payment institutions, regulatory entities, fund managers and other parties, as well as various procedures and operational specifications such as provision, suspension of provision, and use approval to prevent non-banks. The addition of a powerful “firewall” to the business risks of payment institutions has brought positive significance to protecting the rights and interests of small and medium-sized customers and promoting the healthy and sustainable development of the industry. In addition, the classified management of payment institutions will also help promote the compliance of institutions.

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