The Notice on Strengthening the Management of Payment Acceptance Terminals and Related Business No. 259 (“Notice 259”) on October 13, 2021. Issued by the People’s Bank of China and effective from 1 March 2022, this is the first legislation to regulate quick response (“QR”) code payments (Company Collection Payment Codes).
Notice 259 require QR code payments prohibits Alipay or Wechat personal accounts to be used for the sale of goods and services. Companies shall register a company account with Wechat and/ or Alipay and use the company QR code for payments.
The provisions shall affect many commercial transactions for small and medium-sized businesses. Such businesses often use individual accounts to collect payments for ease. Companies should be preparing for the legal changes. For example, changes to the point of sale, business and account registration and other related procedures.
Mobile Payments in China
The rise of digital merchants’ payment applications such as Alipay and WeChat Pay has fueled a near cashless society. Such APPs enable mobile users to link bank cards to their account, transfer and collect payment and pay for goods and services, as well as deposit funds.
For businesses, mobile payments have facilitated an online and offline ecosystem. Namely, payments can be transferred from an individual account to a company account with low transaction fees. Equally, mobile payments have such as purchasing travel tickets, ordering a taxi, renting a bike, paying utilities, online shopping. All of which has been integrated into one digital ecosystem, and propelled the ease of payment transactions.
Notice 259 also addresses the upsurge of illegal activities triggered by mobile payments such as money laundering, online fraud, tax evasion, and criminal activities. Specifically, the purpose of account-to-account transactions is not required to be declared to the service providers. Hence, the current commercial and personal transactions cannot be easily defined by the transaction alone. Under the reform, only company accounts registered with the business license can utilise the collect payments via the QR code.