The Payment and Clearing Association of China has recently issued a new convention outlining key principles and standards for agent-based payment applications. This guidance aims to assist members in maintaining compliance and mitigating associated risks.
Organizations involved in providing services such as account management, transaction processing, and acquiring, switching, and clearing operations should implement a comprehensive regulatory framework. This framework should cover areas including agent oversight, user authorization, risk management, and consumer protection, as stated in the convention released yesterday.
Supervised by the national central bank, this self-regulatory body oversees entities in the payment and clearing industry. Its members include clearing infrastructure providers, commercial banks, and all licensed payment service providers.
The new agreement emphasizes establishing a “know-your-agent” system based on the “know-your-customer” principle. It also calls for strengthened cooperation in risk control between developers and service providers, clear boundaries for agent authorization, well-defined liability agreements with users, and thorough verification of user identities and transaction intentions.
In addition, member organizations should adopt a tiered management approach, ensuring fund security through measures like transaction limits. They are encouraged to develop agent-based payment services cautiously and to enhance their technical security protocols, covering algorithms, cybersecurity, data protection, and ethical use of technology.
Operations related to core payment functions—such as account management, transaction processing, and fund settlement—must be handled by specialized licensed institutions, a senior official from the association stated.
Responsibility for users’ accounts, transactions, funds, and data security ultimately lies with the service providers, the official emphasized. Members are required to submit records to the association before launching any new agent-based payment applications, with mandatory assessments and security tests to ensure robust safeguards for user funds.
This convention aims to balance technological innovation with safety and control, providing clear operational guidance for market participants, according to industry analysts.
The evolution of agent-based payments is progressing through three stages: agent-assisted payments, agent-initiated payments under predefined conditions, and agent-initiated payments under broader, more flexible conditions. Industry experts note that the field is still in its early development phase, with most applications limited to auxiliary transaction scenarios.