How to Do Business in China as a Third-Party Online Payment Provider - Rahi
Global Services

How to Do Business in China as a Third-Party Online Payment Provider

By Vivian Qi

April 27, 2022 - 8 min

Why China?

Online sales are on the rise in China. According to data from eMarketer, 2021’s online sales represented 52.1% of all retail sales in China. This is an 18% increase from 2019 when online sales only accounted for 34.1% of all retail sales in China. In comparison, South Korea has the next highest rate of online sales at 28.9%, with the United States following with a mere 15%.

The e-commerce industry relies heavily on third-party online payment providers. Historically, Chinese regulatory authorities and the People’s Bank of China (PBOC) have maintained tight control over the third-party payment industry. UnionPay (CUP), a China-based financial services corporation, was able to create a monopoly in the industry and, in 2015, become the largest payment processing entity in the world.

However, amid skyrocketing e-commerce growth, the PBOC began opening up the Chinese market to foreign third-party payment providers. In 2018, the PBOC issued Announcement No. 7, which permitted foreign-invested enterprises (FIEs) to process online payments, issue and accept prepaid cards, and collect funds on behalf of merchants. To begin the process of conducting business in China, FIEs must register as a limited liability company or joint-stock company with the People’s Republic of China and apply for a Payment Service Operator (PSO) license with the PBOC.

How to Meet PBOC Requirements for a PSO license

A nationwide PSO license requires paid-in registered capital of 100 million yuan, while a provincial license requires 30 million yuan. Additionally, each FIR must have an established organizational structure with internal and risk management control and a minimum of five senior managers who are familiar with the online payment processing industry. They must also meet requirements for anti-money laundering policies, procedures, and systems.

Amid these stringent requirements, data privacy is PBOC’s main concern. FIEs are classified as Critical Information Infrastructure (CII), which means that all personal and financial information they collect or generate in China must be processed, stored, and analyzed in China. Transferring data outside of China is allowed only if it’s a business necessity and the data subject has been given consent. The FIE must also pass a security assessment to ensure that the data remains confidential by all parties.

This data localization requirement creates a significant obstacle for foreign third-party payment providers seeking to do business in China, as it requires them to build a data center and a disaster recovery (DR) site in China to process payments and meet business continuity requirements. They are also barred from using any type of cloud computing.

How Rahi Can Help

A data center build is difficult. That difficulty is doubled when you’re doing business in a new country with strict requirements. For example, many organizations may not even be aware that CII operators must undergo a formal security and compliance audit by the Cyberspace Administration of China (CAC).

Recently, Rahi has guided a United States-based online payment provider in establishing primary and disaster recovery data centers in China. The extensive project involved vendor selection and management, product procurement, and the configuration, testing, integration, and deployment of 111 high-density racks of equipment. The project had strict deadlines and a short timeframe ahead of its audit, as China does not allow companies the luxury of adjusting their compliance dates.

This United States-based online payment provider selected Rahi due to its global presence, which includes four locations in mainland China, and teams (including data center infrastructure designers, cabling specialists, engineers, technicians, and project managers) with expertise in their respective disciplines and fluency in Chinese and English.

Although the online payment-processing industry in China has become a major business opportunity for financial service providers, it brings with it numerous restrictions and complicated procedural guidelines. Rahi’s expertise, logistical capabilities, geographic reach, and experience will help increase the success of potential FIEs interested in entering the Chinese market.

Contact Rahi today to speak to an expert about becoming a foreign-invested enterprise (FIE) in China.


  • Vivian is the VP of Strategic Sales & Solutions at Rahi China. With more than eight years of experience as part of the Rahi team, she has a demonstrated history of working towards our customers' fulfillment in the information technology and services industry.

, VP of Strategic Sales & Solutions

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