State Council, Decision on Exercising Administration over Access by Bank Card Settlement Institutions

Issued: April 9 2015

Effective: June 1 2015

Applicability: For the purposes of this Decision, the term “bank card settlement business” means the activity, through the formulation of bank card settlement criteria and rules, of operating a bank card settlement business system, authorizing the issuance and acceptance of bank cards branded by the bank card settlement institution in question, providing an inter-organization transaction handling service for its branded bank cards to card issuers and acquirers and assisting them in completing monetary settlement (Article 1).

Main contents: The Decision completely liberalises the bank card settlement market, allowing access to both domestic and foreign investment.

To apply for a bank card settlement organization, an organization shall be an enterprise legal person established in accordance with the PRC Company Law and satisfy conditions such as:

(1) having registered capital of at least Rmb1 billion; and

(2) having at least one major qualified investor holding at least 20% of the shares or multiple major qualified investors holding at least 25% of the shares in total, the aforementioned major investor(s) having total assets of not less than Rmb2 billion or net assets of not less than Rmb500 million during the year prior to the application, having continuously engaged in banking, payment or settlement business for at least five years prior to submission of the application, having been profitable for at least three years in succession and not having a record of a major violation of laws or regulations during the most recent three years; and for other single investors with a shareholding percentage exceeding 10%, having net assets of not less than Rmb200 million, having a capacity for sustained profitability, having a good credit standing and not having a record of a major violation of laws or regulations during the most recent three years (Article 2).

With the exception of providing foreign currencies for the purpose of cross-border transactions, overseas institutions that wish to provide bank card settlement services for entities in China shall establish foreign-invested enterprises in China in accordance with the law (Article 4).