China will, starting June 1, regulate the market access for bankcard transaction clearing institutions to protect the rights and interests of card users and promote healthy competition in the country’s bankcard clearing market.
A circular released by the State Council on April 22 listed the requirements to apply to set up bankcard clearing institutions and to conduct such business in China:
* Organizations will be able to engage in bankcard clearing business after their applications are approved by the authorities and licenses issued.
The application requirements, covering various aspects, include a minimum of 1 billion yuan ($161 million) of registered capital and certain conditions for the major contributors.
* The banking authorities should decide whether the applications are approved within 90 working days after receiving the applications. The applicants should complete preparatory work within one year after approval and no clearing business is allowed during the period.
* Applicants are required to officially start bankcard clearing services within six months after receiving the business permits.
* Requirements are set on the organizations’ business, including protecting the information they acquire from bankcard clearing services.
* Overseas institutions that provide bankcard clearing services for clients in China should establish foreign-invested enterprises in the country according to law.
* Organizations that have already started business should submit applications for business permits or report their operations to authorities within a year after the new rule takes effect or they will be forbidden to continue the business.