China to permit foreign players to enter $27t payments market

An Alipay logo is seen at a cashier in Shanghai January 12, 2017. REUTERS/Ali Song/Files

China will permit foreign companies to access its $27 trillion payments market, further opening up the world’s second-largest economy.

Foreign players can start applying for payment licenses and will be treated the same as local firms, the People’s Bank of China said in a statement on Wednesday. Applicants must set up local units, establish payment infrastructure — including disaster recovery systems — and store client information domestically, the central bank said.

Premier Li Keqiang on Tuesday promised to protect the intellectual property of foreigners investing in its economy, as China seeks to avoid a trade war with the U.S. Any entrants to the Chinese market — apart from meeting stiff local regulations — will also have to compete with the more than 260 firms that have received payment licenses including Ant Financial Services Group’s Alipay and Tencent Holdings’s WeChat Pay.

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“The domestic market is quite saturated with very strong domestic players, and it is relatively hard for foreign companies to get a piece of the pie,” said Iris Pang, a Hong Kong-based economist at ING Groep NV. “But there is a chance for them to compete in the cross-border payment market.”

Chinese residents are increasingly fond of shopping on overseas e-commerce platforms, which tend to prefer local payment companies, Pang said.

Fair Environment

Allowing foreign firms to enter the payment market with defined regulations helps boost innovation, creates a fair environment for competition, and improves the services of payment providers, the central bank said in the statement.

Some major Chinese players have expanded overseas and offered services to global users, it added, without naming any company. China’s payment firms processed 169 trillion yuan ($27 trillion) of transactions in 2017, a nine-fold surge from 2013, according to the central bank.

With this access to the payment sector, “China fulfilled its promise to further open up the financial sector and, at the same time, it is very confident about the competitiveness of its payment companies,” said Xia Le, chief Asia economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong.

“Banking is the real sector that needs to be further opened up,” he said. “That requires not only lift of policy barriers but also clearing of invisible barriers.”

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.