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Regulation of Retail Payment Systems (RPS)

The Monetary Authority is responsible for designating and overseeing important RPS pursuant to the Payment Systems and Stored Value Facilities Ordinance (PSSVFO).  The PSSVFO stipulates criteria and relevant factors based on which the Monetary Authority will determine whether or not an RPS should be designated.  The policy objective is to ensure that operations of designated RPS are safe, sound and efficient and would contribute to the financial and payment system stability of Hong Kong.

Retail payment systems eligible for designation

The PSSVFO defines an RPS as a system or arrangement for the transfer, clearing or settlement of payment obligations relating to retail activities whether the activities take place in Hong Kong or elsewhere, principally by individuals, that involve purchases or payments; and includes related instruments and procedures.  The term “system or arrangement” intends to provide a broader coverage of the definition; not only will it capture a “system”, such as a computer system, or network, or other physical system infrastructure, but also business arrangements.  RPS under this definition includes, but not limited to, electronic fund transfer systems and payment card schemes.

Criteria of designation

Under section 4(1) of the PSSVFO, an RPS may be designated if the Monetary Authority is of the opinion that -

(a)     the system is, or is likely to become, an RPS whose proper functioning is material to the monetary or financial stability of Hong Kong, or to the functioning of Hong Kong as an international financial centre (section 4(1)(a)); or

(b)     the system should be so designated, having regard to matters of significant public interest (section 4(1)(b)).

In forming an opinion as to whether an RPS may be designated, the Monetary Authority may consider one or more of the following factors, as set out in section 4(4A) : -

(a)     The estimated aggregate value of transfer orders transferred, cleared or settled through the system in a normal business day.

(b)     The estimated average value of transfer orders transferred, cleared or settled through the system in a normal business day. 

(c)     The estimated number of transfer orders cleared or settled through the system in a normal business day.

(d)     The estimated number of participants of the system.

(e)     Whether such system is linked to any designated system or any clearing and settlement system that is, or is operated by, a company recognized as a clearing house under section 37(1) of the Securities and Futures Ordinance.

Explanatory Note on Designation of Retail Payment Systems

The Explanatory Note on Designation of Retail Payment Systems (PDF file, 436KB) explains the relevant policies and procedures adopted by the Monetary Authority with respect to the designation of RPS.

Designated Retail Payment Systems

To date, the Monetary Authority has designated retailed payment systems operated by Visa, Mastercard, UnionPay International and American Express for the processing of payment transactions involving participants in Hong Kong under section 4(1) of the PSSVFO.

Regulatory requirements

A designated RPS is required to comply with the obligations imposed under the PSSVFO.  Among these obligations, Section 7 sets out the general requirements to be complied with in relation to designated systems, and places the responsibility for such compliance on their system operators and settlement institutions.  Those requirements include safe and efficient operation of the system, the establishment of appropriate operating rules, the existence of adequate compliance arrangements with participants, and the availability of sufficient financial resources.

Code of Practice for Payment Card Scheme Operators

Code of Practice for Payment Card Scheme Operators (PDF File, 168KB) has been drawn up by eight payment card scheme operators with credit or debit card operations in Hong Kong and endorsed by the HKMA. The Code sets out general principles for the payment card scheme operators to observe to promote the safety and efficiency of payment card operations in Hong Kong and foster public confidence in their operations.

The Code, effective on 1 January 2007, is non-statutory. The eight payment card scheme operators have committed to adopt and comply with the Code.  The Code remains in force after the commencement of the PSSVFO.

Last revision date: 4 August 2017
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