China is further opening up its markets to foreign investments, allowing international companies to access its payments market, which Bloomberg estimates is around $27 trillion in size.
Citing a statement from the People’s Bank of China, Bloomberg reported foreign companies can begin applying for payment licenses that will allow them the same treatment as local companies. According to the newswire, the companies have to set up local business units in China, create payment infrastructures that take into account disaster recovery systems and store the information of clients in China. Any company that wants to compete in the digital payments market in China will have to take on the greater than 260 firms that have received licenses from the government, reported Bloomberg. Alipay and WeChat Pay are currently the leading digital players in China, each with millions of customers.
“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, in an interview with Bloomberg. “But there is a chance for them to compete in the cross-border payment market.”
The People’s Bank of China aims to enhance innovation, create a fairer environment from competition and improve the services of the payment providers, Bloomberg stated.
At the same time that China is opening up its payment market to foreign players, it is also using its social credit system to prevent people who have committed crimes — such as spreading fake news about terrorism or creating problems on flights — from riding on transportation for as long as a year. According to a report in Reuters, citing statements issued on the National Development and Reform Commission’s website on Friday (March 16), those who were found to be guilty of engaging in financial wrongdoings — including employers who don’t pay social insurance or people who ignored fines — could also face travel restrictions. The rules, noted Reuters, come into effect starting May 1.
Reuters reported the move meshes with Chinese President Xi Jinping’s plan to create a social credit system that is based on the principle of “once untrustworthy, always restricted.” The notices were signed by eight ministries, including China’s aviation regulator and the Supreme People’s Court.