China Grants 13 Long-Term Licenses to Non‑Bank Payment Firms

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The People’s Bank of China (PBOC) has issued its first long-term payment licenses to 13 non‑bank payment institutions, including Douyin Pay (the payment division of ByteDance, the parent company of TikTok) and Huawei’s Petal Pay. 

The development marks a significant regulatory shift as part of China’s revised payment framework, marked by more scrutiny. Announced at the end of 2023, the State Council issued a new framework to replace five-year cycles of license renewal for the “healthy and sustainable development of the non-bank payment sector.” 

Since the introduction of third‑party payment licenses in May 2011, a total of 271 have been issued. However, regulatory tightening, including a moratorium on new licenses in 2016, has seen the number of active entities fall to just 169, marking a 37.6% decline.

Longer licensing periods are hoped to allow for more stability in the tightening regulatory landscape for China’s digital payment sector. This industry is of exceptional importance in China, which leads the world in digital wallet adoption. 

According to CNBC, digital cards are used for 82% of e-commerce transactions and 66% of physical purchases in China, totaling approximately $7.6 trillion worth of transactions. For comparison, digital wallet spending in Europe accounts for 30% of e-commerce transactions and just 13% of physical purchases. 

While long-term licenses are hoped to foster a more stable and enduring regulatory regime, questions remain. For example, the duration of the new long-term licenses does not appear to have been made public. Notably, six other institutions that failed to meet new compliance standards have been denied renewal, indicating stricter compliance standards.