Rules Eased on Third Parties Rendering Collection and Payment Services for Internet Transactions

05/01/2013

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The Financial Supervisory Commission (FSC) issued a letter with Ref. No Jin-Guan-Yin-Piao-Zi-10240000530 on 7 March 2013, stipulating the "Self-regulation of Card Acquirers Entering into Agreements with Internet Platform Operators which Provide Collection and Payment Services for Internet Transactions as Contracted Merchants.” In the past, payments from a card acquirer to a contracted merchant could not be transferred directly to a third person and the regulations regarding Internet platform operators which provide collection and payment services for Internet transactions were lacking. Thus, a card acquirer could only enter into agreements with sellers engaging in Internet transactions rather than directly with the Internet platform operators.

However, since said letter was issued, card acquirers can enter into agreements with Internet platform operators which provide collection and payment services for Internet transactions as contracted merchants. Small shops and individual sellers who in the past could not have been authorized by banks to accept credit card payments now can, through the Internet platform operators which provide collection and payment services for Internet transactions, accept credit card payments from customers for Internet transactions.

According to the FSC, through the Internet platform operators which provide collection and payment services for Internet transactions, consumer payments will be protected by both the banks and the third parties rendering payment processing services, and consumers need not worry about the risk of online transaction fraud or scam sellers. The relaxation of rules gives online shoppers multiple protection, contributing to the development of Internet transactions .

According to the above-mentioned Self-regulation, when the card acquirer enters into an agreement with the Internet platform operators which provide collection and payment services for Internet transactions as contracted merchants, it shall establish a mechanism for credit checking, risk control, periodical audits and contract signing as well as make sure that all credit card payments collected or paid by the service providers are fully guaranteed by a bank or entirely placed in trust. Furthermore, if the credit card payment accepted by the seller exceeds the amount provided by the International Card Schemes, the seller shall enter into an agreement directly with the card acquirer as the contracted merchant rather than accept the payment through the service provider.

The Internet platform operators which provide collection and payment services for Internet transactions shall set up a mechanism for identity authentication and handling of transaction disputes, and shall transfer the payment to the seller only after the buyer receives the goods or services, a certain period has passed or certain conditions have been met.