What Is a Third-Party Transaction?

Third-party payment refers to an online payment model in which independent institutions with certain strength and reputation guarantee can facilitate transactions between the two parties through docking with the network.

Third party payment

Third-party payment refers to an online payment model in which independent institutions with certain strength and reputation guarantee can facilitate transactions between the two parties through docking with the network.

In the third-party payment model, after the buyer purchases the product, he uses the account provided by the third-party platform to pay for the payment (to the third party), and the third party notifies the seller that the payment is received and requires delivery; the buyer receives the goods and inspects the goods , And after confirming, notify the third party to pay; the third party then transfers the money to the seller's account.

On the afternoon of January 13, 2017, the People's Bank of China issued a new regulation in the field of payments, "Notice of the General Office of the People's Bank of China on the Implementation of Central Depository Management of Payment Reserves of Payment Institutions' Customers," which clarified the The customer reserve funds generated during the transaction will be uniformly deposited into a designated account in the future, and will be supervised by the central bank. Payment institutions shall not misappropriate or occupy customer reserve funds. ^[1]

Third-party payment adoption

apart from

After the 2014 National Two Sessions, the central bank further strengthened its supervision over Internet finance. Industry experts point out that in the current tide of revolutionary payment innovation, the central bank's supervision of Internet finance is conducive to market corrections, balancing rights and interests, and reducing risk accumulation. It is also an effective measure to further strengthen third-party payment companies to complete their own risk control and security systems.

On February 12, 2015, the Central Bank released a report on the overall operation of the payment system in 2014. The report shows that the electronic payment business has maintained a growth trend and the mobile payment business has grown rapidly. In 2014, the value of electronic payment business nationwide was 1404.65 trillion yuan, a year-on-year increase of 30.65%.

Data show that in 2014, a total of 33.333 billion electronic payment transactions occurred across the country, with an amount of 140.465 trillion yuan, an increase of 29.28% and 30.65% year-on-year, respectively. Among them, there were 28.574 billion online payment services with an amount of 137.602 trillion yuan, a year-on-year increase of 20.70% and 29.72% respectively. For details, please refer to the "Forecast of China's Third-Party Payment Industry Market Prospect and Investment Strategic Planning Analysis Report". The amount was 6.04 trillion yuan, the number of transactions decreased by 46.11% year-on-year, and the amount increased by 27.41% year-on-year. The mobile payment business was 4.524 billion transactions, the amount was 22.59 trillion yuan, an increase of 170.25% and 134.30% year-on-year.

In terms of the bank card industry, both the number of issued cards and the volume of transactions maintained growth. As of the end of 2014, 4.936 billion bank cards were issued nationwide, an increase of 17.13% over the end of the previous year. In 2014, there were 59.573 billion bank card transactions across the country, an increase of 25.16% year-on-year; the amount was 449.90 trillion yuan, an increase of 6.27% year-on-year.

In addition, from the perspective of the financial system of the payment system, the flow of funds within the jurisdiction of 18 provinces (municipalities and autonomous regions) across the country accounted for more than 50% of the total capital flow of the province (municipalities and autonomous regions). In 2014, the top three regions in terms of total processed capital were Beijing, Shanghai, and Guangdong, and their total capital flows accounted for 28.75%, 14.35%, and 12.57% of the total national capital flows, respectively. ^[5]

The People's Bank of China issued a central bank decree on the 21st to formulate and promulgate the "Measures for the Management of Payment Services of Non-Financial Institutions" to regulate the payment business of non-financial institutions. The "Measures" came into effect on September 1, 2010.

According to the Measures, non-financial institution payment services mainly include online payment, issuance and acceptance of prepaid cards, bank card acquisition, and other payment services determined by the central bank. Among them, online payment behavior includes currency exchange, Internet payment, mobile phone payment, fixed phone payment, digital TV payment, etc.

The Measures clearly stipulate that non-financial institutions providing payment services shall obtain a Payment Business Permit in accordance with the provisions of these Measures and become a payment institution. Payment institutions accept the supervision and management of the People's Bank of China according to law. Without the approval of the People's Bank of China, any non-financial institution or individual may not engage in or engage in payment business in disguise.

For the qualification of payment business applicants, the Measures provide that if the applicant intends to engage in payment business nationwide, its minimum registered capital shall be RMB 100 million; if it intends to engage in payment business within the province, autonomous region, or municipality, it shall The minimum registered capital is RMB 30 million. The minimum registered capital is paid-in monetary capital.

The "Measures" stipulates that the transfer of monetary funds between payment institutions shall be entrusted to the banking financial institutions, and shall not be handled by depositing monetary funds with each other or entrusting other payment institutions. Payment institutions shall not handle the transfer of monetary funds between banking financial institutions.

Implementation Rules of the Administrative Measures for Payment Services of Non-Financial Institutions

With regard to the customer's legitimate rights and interests protection plan, the "Draft for Soliciting Opinions" clearly protects the customer's right to know, clearly informs the customer of the reasons for terminating the payment business, the time to stop accepting the customer's entrusted payment business, and plans to terminate the follow-up arrangements for the payment business. Measures to protect the privacy of customers, clarify the receiving organization of basic information about customer identity, their transfer arrangements, destruction methods, and their supervision arrangements; etc .; protection measures to customers' choice rights; Refund program, etc. If the customer's legitimate rights and interests protection plan involves other payment institutions, it shall also submit supporting documents such as the agreement on the transfer of basic customer identity information and the customer reserve refund arrangements signed with the payment institution concerned.

In terms of charging items and charging standards, the "Draft for Soliciting Opinions" clearly states that payment institutions should determine their charging projects and charging standards for payment services in accordance with the relevant provisions of laws, regulations and departmental regulations. Where laws and regulations and departmental regulations do not clearly define the charging items and charging standards for payment services, payment institutions may reasonably determine the charging items and charging standards for their payment services in accordance with market principles. The payment institution shall disclose the charging items and charging standards of its payment business at a prominent place in the business premises. Where a payment institution has an Internet website, it should also disclose it on a prominent place on the homepage of the website.

In addition, when a payment institution adjusts a charging project or charging standard for payment business, it shall comprehensively consider factors such as market supply and demand, and customer affordability. Before implementing a new payment service charging project or charging standard, the payment institution shall continuously publish the adjustment items in a prominent place on the business site for 30 days. If a payment institution has an Internet website, it shall also be publicly displayed on a prominent location on the homepage of the website; the payment institution shall submit the financial accounting report audited by the accounting firm in the previous fiscal year within 4 months from the end of each fiscal year Where the local People s Bank of China is located; if the payment institution loses money in any of the accounting years within the validity period of the Payment Business Permit or the accumulated losses in more than one consecutive fiscal year exceed 40% of the actual paid-up monetary capital, it shall be in each quarter of the next fiscal year Submit the financial report of the previous quarter audited by an accounting firm within one month from the closing date.

On June 9, 2013, the People's Bank of China issued [2013] Order No. 6,

In order to standardize the management of customer reserve funds of payment institutions, protect the legitimate rights and interests of the parties, promote the healthy and orderly development of the payment industry, and maintain financial and social stability, the People's Bank of China has formulated the "Measures for the Depository and Management of Payment Agent Client Reserves", which are now being implemented .

On November 12, 2014, UnionPay issued the Notice on Further Clarifying the Related Requirements for Illegal Rectification (hereinafter referred to as the Notice), with the intention of regulating the direct connection between banks and third parties, and requested that the business bypassing UnionPay be gradually migrated to UnionPay platform. This time UnionPay rectified the third-party payment and bank direct connection operation, which involved about 30 UnionPay members, but did not involve online payments, let alone Alipay. ^[6]