Companies will come under Hong Kong Monetary Authority regulation from November after one-year transition expires
NIKKI.SUN@SCMP.COM
UPDATED : Wednesday, 06 April, 2016, 12:34am
The operator of the Octopus card will have to apply for a licence to stay in business. Photo: Felix Wong
Over 20 companies have applied for a licence ahead of a new regulation governing stored-value facilities (SVF) taking effect for these firms in November, according to the Hong Kong Monetary Authority.
Prepaid cards such as Octopus as well as mobile and internet payment systems like digital wallets Wechat Pay and Alipay will become subject to regulation by the authority.
The relevant law came into effect in November last year, but operators were granted a one-year transition period.
About 70 per cent of the applicants are current operators, but would not be qualified to provide services after November if they failed to obtain a licence.
The authorities warned that some SVF issuers may leave the market during the transition period – from now until November – as it advised consumers to be cautious in choosing SVF products and services during the period.
“We hope to formulate official supervisory guidelines within the current quarter,” said Henry Cheng, executive director of monetary management, adding it may start granting licences in batches as early as the third quarter.
Among current licence applicants, 50 per cent are local players, 30 per cent are from the mainland and 20 per cent from overseas, according to the authority.
“Our key regulatory focus is the protection of consumers’ money,” said authority senior executive director Howard Lee.
Lee said applicants had to submit a proposal on how they would secure client money if they had to exit the market one day.
Mobile payment systems are covered under the new rules. Photo: SCMP Pictures
“We would need to ensure that all the money kept by SVF operators would be in the names of the individual users rather than the operators,” Lee added.
However, Lee said the regulator tended to allow operators to use the money raised from consumers for investment purposes, but only “safe” or “short-term” investments such as bank savings would be allowed.
Lee added that licence holders were likely to be required to appoint a third party as a trustee to manage the funds, as a way to protect consumers.
At the same time, there will not be a ceiling on the amount of money that can be stored in SVF accounts.
“It would be up to individual operators to convince us if they needed a particular ceiling, and we would assess their requests accordingly,” Lee said.
Under the new regulation, the operator of the Octopus card – the city’s most popular prepaid card – could allow users to put in HK$3,000, three times the current limit. But the company said it hadn’t decided when to take advantage of the new limit.
http://m.scmp.com/news/hong-kong/economy/article/1933860/over-20-companies-apply-hong-kong-licences-operate-stored
