Shanghai Head Office of the People's Bank of China (“PBC”); all branches and operations offices of the PBC; all central sub-branches of the PBC in capital cities of provinces (autonomous regions) and sub-provincial cities; all state-owned commercial banks and joint-stock commercial banks; Postal Savings Bank of China; all non-bank payment institution:

To effectively carry out the overall arrangements of the CPC Central Committee and the State Council on a special campaign against risks in Internet finance, the PBC has decided to implement the centralized deposit of the funds of pending payments of clients of payment institutions, according to the requirements of the Notice of the General Office of the State Council on Issuing the Implementation Plan for the Special Campaign against Risks in Internet Finance (No. 21 [2016], General Office of the State Council) that: “No non-bank payment institution may appropriate the funds of pending payments of clients for similar or other purposes, and an account of funds of pending payments of clients shall be opened with the PBC or a commercial bank meeting the prescribed requirements. The PBC or a commercial bank shall not pay interest on the account of funds of pending payments of clients of a non-bank payment institution.” You are hereby notified as follows:

I Beginning on April 17, 2017, a payment institution shall deposit a certain percentage of the funds of pending payments of its clients in a special deposit account with a designated institution, and there is no interest on the funds in such an account for the time being.

II The PBC shall determine the percentage of funds of pending payments of clients deposited by a payment institution according to the payment institution's business types and latest results of categorization and rating, and adjust it as needed in administration.

III Beginning on April 17, 2017, payment institutions shall deposit the funds of pending payments of clients at the following percentages, and the higher deposit percentage shall apply if a payment institution obtains multiple payment business permits.

Online payment business: 12% (Category A), 14% (Category B), 16% (Category C), 18% (Category D), and 20% (Category E).

Bankcard acquiring business: 10% (Category A), 12% (Category B), 14% (Category C), 16% (D), and 18% (Category E).

Prepaid card issuance and acceptance business: 16% (Category A), 18% (Category B), 20% (Category C), 22% (Category D), and 24% (Category E).

IV The amount of funds of pending payments of clients to be deposited by a payment institution shall be calculated according to the daily average balance of funds of pending payments of clients in the previous quarter and the deposit percentage applicable to the payment institution, and be adjusted once a quarter, and the transfer of such funds shall be completed on the 16th day of the first month of each quarter (postponed if it falls on a holiday).

V The funds of pending payments of clients deposited by payment institutions through commercial banks are not general deposits and are not included in the base for submitting a deposit reserve.

VI Where any payment institution or deposit bank of funds of pending payments of clients fails to implement the relevant requirements of this Notice, the PBC and its branch office will, in consideration of the seriousness of the circumstances, punish it in accordance with Articles 41 to 43 of the Measures for the Administration of the Payment Services of Non-Financial Institutions , and include the relevant acts of the payment institution in the categorization and rating management.

VII The branch offices of the PBC shall effectively perform their duties in accordance with the requirements of this Notice, guide payment institutions and deposit banks of funds of pending payments of clients in effectively conducting the relevant work, and strengthen the inspection and supervision of the relevant work.

The branch offices of the PBC shall forward this Notice to all commercial banks qualified for the deposit of funds of pending payments of clients within their respective jurisdictions. Please report any problems encountered during the implementation to the Payment System Department of the PBC in a timely manner.

The General Administration Department of the People's Bank of China

January 13, 2017