The People's Bank of China--News

The People´s Bank of China Convened the First Quarterly Meeting on Payment Services and Policies with Commercial Banks in Beijing

The People´s Bank of China (PBC) convened its first quarterly meeting on payment services and policies in Beijing. Deputy Governor Ma Delun of the PBC attended and addressed the meeting. Executives from policy banks, state-owned commercial banks, national stock-holding commercial banks, city commercial banks, rural commercial banks and associations of rural credit cooperatives attended the meeting.

Deputy Governor Ma Delun pointed out in his speech that the consultation mechanism on payment services and policies between the PBC and commercial banks was a new initiative launched by the PBC to adapt to the new circumstances to build a safe and more efficient payment system, rise to the new tasks and challenges brought about by the sustained and rapid development of society, economy and finance, wider opening-up, and improvement in people´s living conditions.

Deputy Governor Ma Delun stated that in recent years under the leadership of the State Council, China´s financial infrastructure construction made great headways, and the financial payment and settlement businesses developed very fast. The PBC has intensified efforts to build financial infrastructure, including China National Advanced Payment System, centralized accounting system of the central bank, bank accounts management system and check image exchange system established and launched nationwide; commercial banks launched intra-bank comprehensive business system and realized data centralization in a bid to provide better services, improve competitiveness and reduce hierarchies of management. The bankcard payment system run by China Union Pay and online payment system operated by various payment and settlement organizations provide an important platform for the development of electronic payment services. At the same time, under the support of the PBC, commercial banks and non-bank payment providers made concerted efforts to accelerate the popularization and use of non-cash payment instruments especially electronic payment instruments. Payment services have basically become more market-oriented, specialized and tailor-made. Cross-border payment businesses have also developed rapidly.

Deputy Governor Ma Delun emphasized that while fully acknowledging the achievements, we should recognize the existing problems in payment system development. First, there are new risks and problems associated with the increasingly complex payment system, including such risks as operational risks, technical risks, systemic risks, legal risks, fraud risks and etc; such problems associated with competition, market order, pricing in payment services, information sharing, information security and regulation of payment system, as well as legal framework and institutional building. The PBC and commercial banks shall closely follow and actively deal with the above risks and problems, strengthen consultation and adopt effective measures to prevent and solve them. Second, there are structural problems resulting from imbalanced economic development and widening income gap. For example, traditional payment instruments (such as cash, notes and etc.) will still be frequently used in a relatively long period of time, while the popularization and development of electronic payment will encounter institutional, habitual and ideological constraints. This means traditional payment instruments will coexist with new electronic payment instruments for a long time, and both will play an important role. This is particularly true in rural areas where financial infrastructure is less developed; non-cash payment instruments are not widely used, featuring low penetration of notes and bankcards and even lower penetration of other types of electronic payment instruments. As such, on the one hand, great efforts shall be made to promote electronic payment system and new payment instruments to adapt to economic modernization, informationization and integration; on the other hand, the conditions in less developed regions shall be taken into account in order to develop various non-cash payment instruments tailored to the needs of various regions and groups so as to reduce transaction cost, improve efficiency and prevent risks.

Deputy Governor Ma Delun urged the PBC, commercial banks, non-bank payment service providers to further reinforce the sense of responsibility, make overall plans and pioneer in innovation to push forward the building of China´s payment system. First, intensify the efforts to build CNAPS and other financial infrastructure. Second, fully utilize the public infrastructure to achieve a win-win situation. Third, cultivate a stronger awareness of the overall situations and promote the bankcard industry to develop in a healthy and fast manner. Fourth, gradually achieve market-based pricing of payment and settlement services to promote orderly competition. Fifth, continuously improve the efficiency and quality of payment services with stronger awareness of innovation. Sixth, make earnest efforts to build an Olympics-friendly payment environment so as to provide high-quality payment services for the Beijing Olympics. Seventh, strengthen bank account management by enforcing a real-name account system and improving the network verification mechanism. Eighth, expedite the efforts to improve the legal framework governing payment and settlement. Ninth, build up a pool of qualified professionals through better training. Tenth, do a good job in payment information statistics, analysis and feedback.

Deputy Governor Ma Delun emphasized that the quarterly meeting on payment services and policies between the PBC and commercial banks served as a platform to strengthen the interaction between the PBC and commercial banks, bringing them together to discuss important issues. Such a mechanism will not only contribute to a scientific and down-to-earth policy-making process, and better fulfillment of PBC´s role as the operator, facilitator and supervisor of the payment system, but also inform commercial banks of the policy intentions of the PBC and encourage them to report existing problems to the PBC in a timely manner and put forward realistic suggestions on how to improve payment services.

Statistics show that in 2007, CNAPS, automated clearing houses, intra-bank payment systems and inter-bank bankcard payment system processed 5.4 billion transactions with a value of 851 trillion yuan, a y-o-y increase of 41 percent and 54 percent respectively. In a breakdown, the real-time large-value payment system processed 170 million transactions, totaling 530 trillion yuan, up 21 percent and 105 percent over the previous year respectively; the small-value payment system processed 70 million transactions, totaling 2 trillion yuan. Automated clearing houses handled 460 million transactions at a value of 74 trillion yuan. Intra-bank payment systems of commercial banks processed 2.2 billion transactions totaling 272 trillion yuan, representing a y-o-y growth of 45 percent and 21 percent respectively. Inter-bank bankcard payment system processed 2.5 billion transaction totaling 3.2 trillion yuan, up 48 percent and 80 percent respectively. In 2007, 15.4 billion transactions were settled with non-cash payment instruments, totaling 620 trillion yuan, up 20 percent and 30 percent respectively y-o-y. In a breakdown, the volume and value of bills business totaled one billion transactions and 240 trillion yuan respectively, down 16 percent and up 7 percent y-o-y respectively; outstanding commercial draft discount reached 1.2 trillion yuan, while outstanding inter-bank discount totaled 0.8 trillion yuan. By end 2007, 1.47 billioin bankcards were issued, registering a y-o-y growth of 30 percent, including 1.38 billion debit cards, 17.5 million quasi-credit cards and 70 million credit cards, up 30 percent, 28 percent and 140 percent respectively. A total of 13.5 billion bankcard transactions were processed totaling 120 trillion yuan, up 24 percent and 67 percent respectively y-o-y. In 2007, bankcard-based consumption accounted for 21 percent of the total retail sales during the same period of time, up 4 percentage points over 2006. At end 2007, merchants, POS machines and ATM machines stood at 740,000, 1.18 million and 123,000 respectively, a growth of 41.9 percent, 44.4 percent and 25.8 percent respectively compared to the same period of the previous year. As of end 2007, outstanding credit of credit cards (including credit cards and quasi-credit cards) reached 75 billion yuan, while the total credit line of credit cards was 630 billion yuan. In addition, there were 900 million settlement transactions of other types, totaling 260 trillion yuan, up 14 percent and 48 percent over the same period of the previous year respectively.