Hong Kong Concludes Payments Regulation Consultation

On 31st October, the Hong Kong government published its conclusions to the consultation process launched in May, 2013 by the Financial Services and Treasury Bureau (the “FSTB”) and the Hong Kong Monetary Authority (the “HKMA”) for a proposed new regulatory regime for stored value facilities (“SVF”) and retail payment systems (“RPS”).

Headline Points

The government has made few changes from the outlines for the new regime set out in its May, 2013 consultation paper, but there are some notable exceptions:

  • The government has to some degree taken on board concerns that the new regime would give banks unfair competitive advantage in the emerging payments field. As per the original proposal, banks will continue to enjoy the benefit of being deemed to be licensed to operate SVFs, but will be obliged to keep their SVF float separate from deposits and other funds and meet the same float safeguarding principles applicable to non-bank SVFs.
  • The potential scope of SVF regulation has been reduced to exclude “non-money” facilities, such as loyalty schemes, airmiles and coupons intended for use on e-commerce platforms selling third party digital content and software.
  • Non-device SVFs will not be subject to a HKD3,000 blanket maximum stored value, as originally proposed, but will instead by subject to maximum value requirements specifically set out in the applicable licence.

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