The Cabinet today passed a draft act governing electronic payment institutions, which Premier Jiang Yi-huah said is expected to help promote Taiwan's e-commerce industry and protect consumer rights and interests.
In an e-commerce era, a growing number of non-financial institutions are offering online payment services to make payments on behalf of small and individual businesses. To provide a legal basis for such third-party payment services, the bill was drafted by the Financial Supervisory Commission (FSC) to allow non-financial institutions to store value and transfer funds through online virtual accounts.
"The act will help solidify the development of electronic payment institutions and provide consumers with secure and convenient fund transfer services. This in turn will strengthen people's confidence in online transactions, reduce costs for making small payments, and foster an environment favorable to small and individual businesses." said Premier Jiang.
The draft bill will be sent to the Legislative Yuan for review. The premier requested the FSC to communicate with ruling and opposition legislative caucuses so that the legislation procedures can be completed as soon as possible.
According to FSC Minister Tseng Ming-chung, e-commerce is revolutionizing the entire business sector, and third-party payments are key to facilitating e-commerce. Responding to suggestions about removing ceilings on the amount of funds stored or transferred, or easing B2B restrictions to allow enterprises to collect larger payments, Tseng said that other countries have all set ceilings in this regard and that Taiwan's current e-commerce infrastructure has been set up to handle most large-amount transfers. He added the FSC will provide detailed explanations of these policies to the public.
The draft bill may be summarized as follows:
1.The bill contains a definition of electronic payment institutions, the scope of their business, the principles for operation, and the minimum requirement on paid-in capital. (Articles 3, 4 and 7)
2.This act will apply to overseas institutions operating electronic payment businesses in Taiwan, as well as to institutions that work with or assist overseas institutions in providing electronic payment services in Taiwan. (Article 14)
3.The bill sets limits on the value of funds that can be stored, on the amount transferred between accounts, and on the amount of the transaction. (Article 15)
4.The electronic payment institution should deposit a sufficient amount of reserve when the stored-value funds they receive reach a certain level. For the payments made, the institution should declare trust in full or obtain full guarantee from a bank. (Articles 19 and 20)
5.Stored-value funds may be put to other uses, and the manner of use is restricted by this act. If the institution generates interest or other gains from the use of the funds, it may keep a specific percentage of the gains; in case of losses, the clients should be the first to be compensated. (Article 21)
6.Institutions should set up a user identity verification mechanism and store transaction records safely. (Articles 24 and 25)
7.Service providers must protect data privacy and security and ensure the safe operation of their information systems. The bill also contains provisions for managing payment services for offline transactions (such as from brick-and-mortar stores). (Article 29)
8.The governing authority may enforce an exit mechanism or take action against a company that violates laws or its articles of incorporation, or is suspected of improper management, or has accumulated losses exceeding 50 percent of its paid-in capital. (Articles 35 to 37)
9.Penalties will be imposed on companies that operate (including in conjunction with overseas institutions) without permission from the governing authority. Penalties also apply to companies that misuse stored-value funds, or have neither declared trust in full nor obtained full bank guarantee for the payments received. (Articles 43 to 45)
10.Companies already providing electronic payment services must still apply for a permit when this law takes effect. Companies already working with overseas institutions to provide electronic payment services in Taiwan must also apply for a permit. (Articles 53 and 55)