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Recently, the People's Bank of China (PBOC) updated the information on its official website regarding significant changes in non-banking payment institutions. As of the end of May, the central bank has approved the name changes of 31 payment institutions, including Netbank Online (Beijing) Technology Co., Ltd. and LeShua Technology Co., Ltd. Concurrently, the merger application of two institutions under Ping An was also approved, combining two licenses into one.

Since May 1, 2024, the "Regulations on the Supervision and Administration of Non-Bank Payment Institutions" (hereinafter referred to as the "Regulations") have been officially implemented, and the aforementioned changes are primarily in response to regulatory requirements.

Name Changes for 31 Payment Institutions

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In terms of the name changes of payment institutions, according to the information disclosed by the central bank, the PBOC has approved the name changes of 31 payment institutions at once. This includes payment institutions under various platforms such as Suning and NetEase.

Overall, after the name changes, all 31 payment institutions have added the word "Payment" to their company names. Specifically, the PBOC agreed to change the company name of Nanjing Suning Yifubao Network Technology Co., Ltd. to "Nanjing Suning Yifubao Payment Technology Co., Ltd."; and agreed to change the company name of NetEase Bao Co., Ltd. to "NetEase Payment (Hangzhou) Co., Ltd.", among others.

The Regulations, which came into effect on May 1, 2024, have set forth several detailed requirements for payment institutions. In terms of institutional names, it is stipulated that the names of non-bank payment institutions should include the word "Payment." Without legal approval, no unit or individual may engage in or disguisedly engage in payment services, nor may they use the word "Payment" in their unit names and business scopes, except as otherwise provided by laws, administrative regulations, and national provisions.

Wang Pengbo, Chief Analyst at Broad Consulting, believes that requiring licensed payment institutions to include the word "Payment" in their names, while prohibiting other units and individuals from improperly using "Payment" and conducting related businesses, helps to clarify the boundaries of payment services and assists financial consumers in differentiation. Institutions that have not yet changed their names will also align with this requirement in the future.

In addition to the approval of the name changes for the aforementioned 31 payment institutions, two other payment institutions have been approved to merge into one.

According to the information disclosed by the central bank, the merger of Ping An Pay Electronic Payment Co., Ltd. and Ping An Pay Technology Service Co., Ltd. has been approved. After the merger, the registered capital of Ping An Pay Electronic Payment Co., Ltd. has increased to 1.1695 billion yuan, and the business type of the "Payment Business License" has added the issuance and acceptance of prepaid cards (nationwide). Ping An Pay Technology Service Co., Ltd. will terminate its payment business and cancel the "Payment Business License"; the main investor of Ping An Pay Electronic Payment Co., Ltd. has been changed from Shanghai JieYin Electronic Commerce Co., Ltd. to Ping An YiQianBao Electronic Commerce Co., Ltd.

It is reported that Ping An YiQianBao is a subsidiary of Ping An Group, which owns payment institutions such as Ping An Pay Electronic, Ping An Pay Technology, and point service provider Shenzhen Wanli Tong Network Information Technology Co., Ltd.The merger of the two aforementioned payment companies is also in response to the new payment regulations that came into effect on May 1st. The regulations stipulate that the same shareholder shall not directly or indirectly hold more than 10% of the equity or voting rights in two or more non-bank payment institutions of the same business type. The same actual controller shall not control two or more non-bank payment institutions of the same business type.

Wang Pengbo believes that the regulatory requirement for payment institutions to consolidate and "slim down" is mainly to focus the institutions on their main business, reduce internal competition and friction, facilitate centralized management, and prevent the occurrence of financial risks. In the future, relevant institutions will still choose to merge their subsidiaries or auction off excess payment licenses to achieve compliance.

The industry's "survival of the fittest" path becomes clearer.

Since the implementation on May 1st, the new regulations have been in effect for "a full month." In fact, since last year, the payment market has undergone a series of changes, with various non-bank payment institutions making adjustments at a rapid pace.

Among them, there has been a frequent increase in capital by payment institutions. For example, according to the previous public notice by the central bank, Tencent's payment technology company, Tenpay, was approved to increase its registered capital to 15.3 billion yuan, which is more than 15 times the previous scale; the international payment giant PayPal's wholly-owned subsidiary in China, PayPal (Beijing) Co., Ltd., increased its registered capital to 4.52 billion yuan; and Beijing Didi Payment Technology Co., Ltd. increased its registered capital to 400 million yuan.

According to the regulations, the minimum paid-in capital for payment institutions is 100 million yuan, and it is also clearly stated that the central bank can raise the minimum registered capital limit based on the business type, operating area, and business scale of the payment institutions.

On April 22nd, the People's Bank of China issued the "Implementation Details of the Supervision and Administration Regulations for Non-Bank Payment Institutions (Draft for Comments)," which further explained the "registered capital requirements" and will also stipulate additional increases in registered capital based on the operating area and business type. The minimum registered capital limit for some institutions operating nationwide with full licenses may be raised to 400 million yuan.

Non-bank payments have played an important role in small amounts and convenience. According to statistics, by the end of last year, there were 183 payment institutions nationwide, with an annual transaction volume of over 100 trillion transactions and an amount of nearly 400 trillion yuan, accounting for about 80% and 10% of the total electronic payment business in the country, serving over 1 billion people and millions of merchants.

Yang Tao, Deputy Director of the National Financial and Development Laboratory of the Chinese Academy of Social Sciences and Director of the Payment and Settlement Research Center, believes that the regulations more systematically clarify the definition and establishment permit of payment institutions, adhere to licensed operations and strict access thresholds, and also establish a normalized exit mechanism for institutions with serious illegal and regulatory violations. This makes the industry's "entry and exit mechanism" more clear and reasonable, and through "survival of the fittest" and "rewarding the good and punishing the bad," the path to improving the quality and efficiency of the industry becomes clearer.