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The People’s Bank of China (PBoC) has issued its first batch of “long-term” licences to non-bank payment institutions, in line with its efforts to tighten supervision of the sector.
On July 4, 2025, the PBoC announced that 13 non-bank payment institutions have received long-term licences, following renewals of their previously held five-year licences.
The change in licensing follows the introduction of the Regulations on the Supervision and Administration of Non-Bank Payment Institutions, which were enacted by China’s State Council in 2023 and came into effect in July 2024.
However, the PBoC introduced a 12-month transitional period due to a number of imminent renewals.
The new regulations, in combination with their Implementation Rules, replace the previous five-year licensing system with a new, permanent model.
The previous regulation, the Measures for the Administration of Payment Services of Non-financial Institutions, was China’s first attempt to establish a specific licence for non-bank payment institutions.
In effect since 2010, the measures authorised the PBoC to issue payment business licences to qualifying firms, including stored value facilities (SVFs), non-bank acquirers and issuers of prepaid cards.
The bigger picture
China’s latest regulations are designed to ensure that non-bank payment institutions are subject to continuous, rigorous supervision without the need for licence renewals.
Under the new long-term model, licences do not have an expiry date. Instead, as long as the firm in question remains compliant with existing regulations, the licence may be held indefinitely.
As the PBoC will no longer have to consider licence renewals, it will have more resources to invest in supervision and oversight.
The PBoC’s intention to subject licensees to higher standards of supervision and compliance is shown by several new articles that appear in the Regulations on the Supervision and Administration of Non-Bank Payment Institutions.
Article 21, for example, requires that licensees establish a “continuous” and “effective” user due diligence system, a requirement that did not feature in the 2010 measures.
The system should “identify and verify” user identities, understand user “transaction backgrounds and risk profiles”, and adopt “corresponding risk management measures”.
Article 21 also prohibits licensees from entrusting “core business” or “technical services” that involve safeguarding of funds or information security to third parties.
Another new feature of the 2024 regulations is the concept of a “systemically important” non-bank payment institution.
Article 38 authorises the PBoC to formulate “recognition standards” and "supervision and management rules” that will apply exclusively to systemically important non-bank payment firms.
Once this framework is available, it will be clearer what it means for firms that get the designation.
The same article also authorises the PBoC to maintain a confidential ratings system for licensees based on supervisory and management standards.
Failure to meet these standards can result in licence revocation.
Why should you care?
The long-term licensing model should not be read as an “opening up” of China’s payment system.
Rather, the intention is to restrict China’s payments system to a smaller number of firms, and ensure that these firms meet stricter standards of supervision and compliance.
At the time of writing, 165 firms hold payment business licences in China, although the PBoC has issued at least 271 licences since the introduction of the licensing system in 2011.
The high churn rate reflects the bank’s efforts to ensure that China’s payment system is accessible to only a select few non-bank firms.
Moreover, the churn has taken place primarily among smaller firms, which have surrendered market share to larger rivals upon exit.
In 2016, this dynamic became embedded when the PBoC issued a moratorium on the issuance of new payment business licences.
The 2016 moratorium has not been rescinded, meaning that since then, the PBoC has only approved payment business licence renewals, returns and revocations.
In this context, there is a question concerning how many firms (and which) will still have their licences at the end of the transitional period.
To date, the only foreign firm to obtain a payment business licence in China is PayPal, which did so by acquiring GoPay, an existing licensee, in 2019.
Additionally, both Mastercard and American Express (Amex) have obtained regulatory approvals in China through local joint ventures.
As covered by Vixio, both joint ventures are approved to engage in domestic bank card clearing activity, and Amex’s joint venture is approved to issue credit cards within China.
International firms considering applying for payment business licences would benefit from familiarising themselves with the 2024 regulations, particularly the following sections:
- Article 18: The business systems and backups of non-bank payment institutions shall be stored within the country.
- Article 19: Non-bank payment institutions that provide payment services for domestic transactions shall complete transaction processing, fund settlement and data storage within the country.
- Article 33: Where the network facilities, information systems, etc. of non-bank payment institutions are legally identified as key information infrastructure, or where the amount of personal information processed reaches the amount specified by the national cybersecurity and informatisation department, the processing of personal information collected and generated within the territory shall be conducted within the territory.
For many years, access to China’s domestic payments system has been something of a holy grail for Western firms, due to the scale of the opportunity and the country’s rapid digitisation.
Although the PBoC is not necessarily opposed to the entry of foreign payment firms, it makes clear that foreign firms may access the domestic market only on China’s terms.
The framework that the 2024 regulations provide represents both an opportunity for global players seeking to access China, and a reiteration of state control of the market.
