The People’s Bank of China (PBoC) has issued a notice which sets clear guidance for foreign payment companies wanting to enter China’s payments market.

The annual processing volume of third-party payment companies in China stands at 169 trillion yuan (US$27 trillion), up from 18 trillion yuan in 2012, representing a compounded annual growth rate of 75%.

“As China continues to open its market, more and more foreign institutions are looking to enter China’s payment market,” says PBoC.

The notice is significant, as until now the normal practice was for foreign companies in China to partner with local players to enter the market. In 2015, Paypal partnered with Lianlian Pay, and in 2016 Apple Pay partnered with China Union Pay. The notice says that foreign third-party companies will be subject to same regulations as local companies. Foreign companies will need to fulfil several requirements in order to obtain a payments license to offer payments services in China.

According to PBoC, foreign institutions are required to set up an onshore legal entity and should put in place a payment system with great security and discipline. They must have the capability for independent processing, as well as with the ability to deal with emergencies. Foreign payment companies are also required to store personal and financial data in China onshore. On top of the basic requirements, foreign companies need to comply with local anti-money laundering regulations.

In 2016, China opened its market to foreign bank companies, potentially giving groups like Visa and Mastercard access to China’s fast-growing bank card market. But the central bank also required foreign service providers to set up technology and data infrastructure and back-up data systems in China.

While the retail payment market has been dominated by Alipay and WeChat Pay, there is no clear leader in the corporate payment market. As a result, third-party corporate payment companies are adopting unique strategies in China. For example, Lianlian Pay focuses on cross-border e-commerce payment.

On the other hand, Chinese payment leaders are also looking to expand their footprints in overseas market. Alipay is now in over 27 jurisdictions covering 120,000 merchants, while WeChat is now in 13 overseas countries covering 130,000 overseas merchants.