Shanghai Free Trade Zone (FTZ) launched a new pilot program for RMB cross-border settlement service, allowing five third-party payment companies, namely, All In Pay, 99Bill, ChinaPay, EasiPay, ShengPay to handle this business in cooperation with their bank partners (via Tech Sina).
In order to carry out the service, each of the five payment service providers will open a cross-border RMB account at one of the Shanghai branches of five commercial banks, including Industrial and Commercial Bank of China, Bank of China, China Construction Bank, China Merchants Bank and Minsheng Bank.
This move allows domestic individual consumers as well as enterprises to purchase overseas services or products with RMB directly, facilitating the transaction procedures. More importantly, no commission fee will be charged for RMB settlements.
According to the guideline from PBOC, companies with online payment licenses that are either located in Shanghai or run subsidiaries in the free trade zone can provide cross-border RMB payment services. This means all the 17 payment companies with online payment license in Shanghai are qualified to run this business.
It is worth noting that the Hangzhou-headquartered Alipay and Shenzhen-based Tenpay, two leading domestic payment services backed by Alibaba and Tencent respectively, are not included in the scale. But both Alipay and Tenpay are now offering their own cross-border payment solutions.
The transaction volume of RMB cross-border settlement hit 4.63 trillion yuan ($762.21 billion) in 2013, up from 2.94 trillion yuan in one year earlier, according to PBOC.
Chinese e-payment business grows rapidly in recent years, recording 25.78 billion orders and a turnover of 1,075 trillion yuan in 2013, up 27.40% and 29.46% respectively from a year earlier, according to bank-level data released by PBOC.
The pilot free trade zone which was launched in September last year has initiated a series of reforms for Chinese Internet industry, despite that there are still a lot of Internet businesses not allowed in the zone as expected. Chinese State Council finally lifted the ban on game console imposed in 2000, allowing foreign-invested companies to produce and sell game consoles in the newly established free trade zone.
image credit: Dfdaily