Payment Aggregators and PSP Selection for E-Commerce in China

Selecting a payment aggregator for China e-commerce hinges on one distinction: licensed direct clearing at roughly 0.6% versus unlicensed "second clearing" arrangements that can constitute a criminal offense. With 185 licensed non-bank payment institutions as of December 2023, your choice is a compliance decision first and a pricing decision second.

Quick Facts

What Is a Payment Aggregator in China, and How Does It Differ from a Licensed PSP?

A payment aggregator (often called a "fourth-party payment" provider) is a technology layer that connects your store to multiple licensed payment service providers. It does not hold a license and, critically, must never touch or settle customer funds. A licensed PSP — a non-bank payment institution — holds a Payment Business License issued by the People's Bank of China and clears funds directly.

The regulatory foundation is the Regulation on the Supervision and Administration of Non-Bank Payment Institutions (State Council Decree No. 768), effective May 1, 2024. Article 6 states that no entity may engage in payment business without approval, and no company may even use the word "payment" in its registered name or business scope without a license. For a payment aggregator in China e-commerce, this means the aggregator's role is strictly technical: routing, reconciliation, and interface management — never settlement.

This structure is legal and common. The Fujian Provincial Public Security Department's 2020 advisory confirms that aggregation service providers do not need a license but may not conduct client fund settlement. The danger arises when an aggregator quietly becomes a settlement layer — the "second clearing" model discussed below.

What Does the 2024 Payment Regulation Change for Foreign Sellers?

The Regulation on Supervision and Administration of Non-Bank Payment Institutions restructured the entire licensing regime, and several provisions directly affect foreign e-commerce operators choosing partners.

First, the business classification changed. The old categories (internet payment, mobile phone payment, prepaid card issuance, bank card acquiring) were replaced by two functional types: stored-value account operation and payment transaction processing. Per the People's Bank of China implementation measures (PBOC Order No. 4, 2024), payment transaction processing Type I corresponds to the former bank card acquiring business, while stored-value account operation Type I corresponds to the former internet payment license. When you vet a PSP, ask which new category its license covers — an acquiring-only license cannot lawfully run internet payment wallets.

Second, the entry bar rose. A non-bank payment institution requires minimum registered capital of RMB 100 million in fully paid-in monetary capital, and the People's Bank of China decides on applications within 6 months. Foreign-invested entities face an additional rule: an overseas non-bank institution seeking to provide cross-border payment services to domestic users must establish a non-bank payment institution within China.

Third, data localization is mandatory. Business systems and their backups must be stored within China, and payment services for domestic transactions must complete transaction processing, fund settlement, and data storage onshore. If your global PSP claims to process China transactions offshore, it is describing a non-compliant model.

How Do I Tell a Compliant Aggregator from an Illegal "Second Clearing" Operator?

This is the single most important vetting question, because the line is criminal, not administrative. Under the [Supreme People's Court and Supreme People's Procuratorate Interpretation on Illegal Fund Payment and Settlement (Fa Shi [2019] No. 1, effective February 1, 2019)](http://www.qianyang.gov.cn/col13677/col13708/col13738/202012/t20201212_465240.html), unlicensed settlement of funds — "second clearing" — can constitute the crime of illegal business operation.

The mechanics of a second-clearing scheme are documented in a Fujian Provincial Public Security Department case advisory (April 2020): the platform connects upward to licensed payment platforms and downward to merchants, uses two different merchant names for each side, and passes funds through reserve accounts twice, forming a hidden capital pool. Fees in disclosed cases ranged from 0.5% to 4% depending on volume.

The case data is sobering. One platform (Tongbao Pay) linked more than 2,000 gambling websites and processed nearly RMB 3 billion in two months. Another (51cloudpay) connected to 2 banks and 8 licensed payment institutions while handling RMB 106.3 billion across 5.45 million users. In one fourth-party payment case, investigators traced funds through 15 layers upstream and 24 layers downstream.

A practical test: ask where your settlement statement originates. If the paying entity is not a bank or a licensed non-bank payment institution, walk away.

What Are the Fee Benchmarks for Licensed Direct Integration?

For a payment aggregator in China e-commerce selection, anchor your negotiations to official published rates. Alipay's official documentation lists a standard rate of 0.6% per transaction for direct merchant integration, within an industry range of 0.6%–1%. WeChat Pay's official onboarding guide lists rates of 0.6%–1% depending on business category, with no application fee.

Two cautions. First, the 0.6% figures apply to licensed direct scenarios; if a reseller quotes dramatically below 0.6%, ask how — the answer may involve second clearing. Second, same-day settlement surcharges and aggregator service fees have no official published standard, so treat any specific number you receive as negotiable and verify it against your final merchant agreement.

Which License Qualifications Matter for Cross-Border E-Commerce Payments?

If you sell into China via cross-border e-commerce (bonded warehouse or direct mail), customs rules add a qualification layer. Under General Administration of Customs Announcement No. 194 of 2018, effective January 1, 2019, payment enterprises participating in cross-border e-commerce must be either a bank holding a Financial License, or a non-bank payment institution holding a Payment Business License whose business scope includes internet payment.

This matters for aggregator selection: your aggregator must route through a PSP whose license scope explicitly covers internet payment under the new classification. The People's Bank of China implementation measures map stored-value account operation Type I to the former internet payment business — confirm your PSP's license reflects the correct new category.

Record-keeping also extends to your own platform. Under the E-Commerce Law of the PRC, e-commerce operators must preserve transaction information for no less than 3 years from the date of transaction completion. Build this retention requirement into your data architecture from day one, noting that payment data itself must be stored onshore under the 2024 Regulation.

How Long Does PSP Integration Take, and What Does the Process Look Like?

Integration timelines are practice-based estimates rather than official standards: expect roughly 2 to 8 weeks depending on complexity. A simple WeChat mini-program store with a standard aggregator plugin may complete in 2 weeks; a custom omnichannel stack with ERP reconciliation can run toward 8 weeks or longer.

Here is a seven-step selection and integration framework our advisory team recommends:

1. Define your payment scenario. Determine whether you need domestic CNP acquiring, cross-border collection, or both — the license scope required differs under Customs Announcement No. 194.
2. Verify the PSP's license category. Request the license number and confirm the new classification (stored-value account operation or payment transaction processing) via the People's Bank of China.
3. Confirm the clearing model. Obtain written confirmation that funds settle directly from the licensed PSP to your merchant account — no intermediate account.
4. Benchmark fees against 0.6%–1%. Compare quotes against Alipay's and WeChat Pay's published rates; investigate any quote materially below 0.6%.
5. Review the aggregator contract for settlement language. Reject any clause granting the aggregator rights to receive, hold, or settle funds.
6. Plan data localization. Ensure transaction processing, settlement, and storage occur within China, and design a 3-year transaction record retention system.
7. Test settlement statements before launch. Run live transactions and verify the paying entity on your statement is the licensed institution, not a third party.

What to Watch Out For

Second clearing disguised as "aggregation." The criminal exposure is real: the 2019 judicial interpretation targets unlicensed fund settlement, and regulators maintain high-pressure enforcement against unlicensed payment businesses. If your funds touch an unlicensed intermediary account, both the platform and potentially your enterprise face risk.

Mixing license-count statistics. You will encounter two different figures: 271 licenses cumulatively issued since May 2011 (with 236 valid as of December 2020) and 185 institutions as of December 2023. These are different snapshots — never cite them interchangeably in your business plan.

Assuming foreign PSPs can self-certify. An overseas non-bank institution must establish a China-registered non-bank payment institution to serve domestic users, with RMB 100 million paid-in capital and a 6-month approval window. Most foreign sellers should partner with an existing licensed institution rather than attempt this route.

Ignoring the name restriction. The Regulation prohibits using "payment" in a company's name or business scope without a license — relevant if you plan a China entity to operate aggregation-style services.

Underestimating case severity. The Tongbao Pay and 51cloudpy cases — RMB 3 billion in two months and RMB 106.3 billion cumulative, respectively — were individual disclosures, not industry norms, but they illustrate how deep unlicensed networks can run: 15 layers up, 24 down in one investigation.

Frequently Asked Questions

Q: Do I need a payment license to sell on Tmall or JD as a foreign brand?

A: No. Marketplaces integrate licensed PSPs themselves; you sign a merchant agreement with the platform and receive settlement through its licensed channels. Your focus is verifying the platform's settlement entity is licensed. The 185 licensed institutions as of December 2023 handle the clearing; your obligation is record retention of at least 3 years under the E-Commerce Law.

Q: Is using a payment aggregator in China e-commerce legal?

A: Yes, when the aggregator provides only technical routing and never settles funds. The Fujian Provincial Public Security Department confirms aggregation providers need no license but may not conduct client fund settlement. Legality collapses when the aggregator touches money — that becomes unlicensed second clearing, prosecutable under the 2019 judicial interpretation on illegal fund payment and settlement.

Q: What fee should I expect to pay for Alipay and WeChat Pay?

A: Anchor to official rates: Alipay lists 0.6% per transaction for direct integration, within a 0.6%–1% industry range, and WeChat Pay lists 0.6%–1% by business category with no application fee. Aggregator technology fees have no official standard and are negotiated separately. Quotes far below 0.6% warrant scrutiny of the clearing model.

Q: What is "second clearing" and why is it dangerous?

A: Second clearing occurs when an unlicensed intermediary receives funds from payers and settles to merchants from its own account, creating a capital pool. The Supreme People's Court interpretation effective February 1, 2019 classifies this as illegal fund payment and settlement. Disclosed cases show fees of 0.5%–4% and fund trails spanning 15 layers upstream and 24 downstream.

Q: Can a foreign company obtain its own China payment license?

A: In principle yes, but the bar is high: RMB 100 million in fully paid-in registered capital, a decision within 6 months of application, and — for overseas institutions serving domestic users — establishing a China-registered non-bank payment institution. Business systems and data must reside onshore. Most foreign e-commerce sellers should instead partner with an existing licensed PSP.

Q: Which license scope is required for cross-border e-commerce payment?

A: Under Customs Announcement No. 194 of 2018, effective January 1, 2019, the payment enterprise must be a bank with a Financial License or a non-bank payment institution with a Payment Business License covering internet payment. Verify your PSP's license scope under the new 2024 classification, where stored-value account operation Type I corresponds to the former internet payment business.

Q: How long does PSP integration typically take?

A: Expect an estimated 2 to 8 weeks depending on integration complexity — this is a practice-based estimate, not an official standard. A standard mini-program store with a plugin-based aggregator sits at the low end; custom ERP reconciliation and omnichannel stacks push toward the high end. Budget additional time for KYC document verification before your first live transaction.

Q: How long must I keep transaction records?

A: Under the E-Commerce Law of the PRC, e-commerce operators must preserve transaction information for no less than 3 years from the transaction completion date. Separately, the 2024 Payment Regulation requires payment business systems, backups, and domestic transaction data to be stored within China. Design your data architecture to satisfy both requirements simultaneously.

Q: How big is China's non-bank payment market?

A: In 2022, non-bank payment institutions processed over 1 trillion transactions worth nearly RMB 400 trillion — roughly 80% of national electronic payment transaction volume and about 10% by value — serving more than 1 billion individual users. The sector operates under 185 licensed institutions as of December 2023, down from 236 valid licenses in December 2020.

Q: How can CnBusinessHub help with PSP selection?

A: Our advisory team can help you evaluate aggregator and PSP options against the compliance checklist above — verifying license categories, clearing models, and fee benchmarks — and coordinate with qualified local professionals for merchant onboarding. We do not issue licenses ourselves; we structure your pathway so your payment stack is compliant from the first transaction.

Conclusion

Three takeaways for your China payment stack:

1. License status determines legality. With 185 licensed non-bank payment institutions (December 2023) and a RMB 100 million capital bar under the 2024 Regulation, always contract with a licensed institution for settlement.
2. Benchmark against 0.6%–1%. Alipay's published 0.6% and WeChat Pay's 0.6%–1% are your anchors; a payment aggregator in China e-commerce should add transparent technology fees, never opaque spreads.
3. Verify the clearing path, not the marketing. Confirm funds settle directly from the licensed PSP, data resides onshore, and records are kept 3 years — the difference between compliant aggregation and criminal second clearing is where the money flows.

For personalized guidance on your China e-commerce licensing pathway, contact the CnBusinessHub advisory team at consult@CnBusinessHub.com to book a consultation.

Written by the CnBusinessHub Advisory Team, China market-entry advisors since 2019 — 1,500+ foreign enterprises guided across 16+ cities.

Last updated: 2026-10-11 | Next review: April 2027

Sources

1. Regulation on the Supervision and Administration of Non-Bank Payment Institutions (State Council Decree No. 768)
2. Ministry of Justice — Publication of State Council Decree No. 768
3. Ministry of Justice — Q&A on the Non-Bank Payment Regulation
4. Implementation Measures for the Non-Bank Payment Regulation (PBOC Order No. 4, 2024)
5. Fujian Provincial Public Security Department — Beware of Fourth-Party Payment as a Money Laundering Channel (April 2020)
6. Qianyang County Government — Beware of Crimes Using Fourth-Party Payment Platforms (December 2020)
7. Zibo Municipal Government — Notice on Purifying the Payment Market
8. Alipay Open Platform — Product Rates and Application Requirements
9. WeChat Pay — Merchant Onboarding Guide
10. General Administration of Customs — Announcement No. 194 of 2018
11. Cyberspace Administration of China — E-Commerce Law of the PRC

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