International Operations Payments in China 2023: Best Practices

Chi­na is one of the largest and fastest-grow­ing mar­kets in the world, attract­ing many for­eign busi­ness­es and investors who want to tap into its poten­tial. How­ev­er, mak­ing and receiv­ing pay­ments in Chi­na can be chal­leng­ing due to its com­plex reg­u­la­to­ry envi­ron­ment, cur­ren­cy con­trols, and pay­ment sys­tems. In this arti­cle, we will explore the best prac­tices for inter­na­tion­al oper­a­tions pay­ments in Chi­na in 2023, focus­ing on the trad­ing and the pay­ment cross-bor­der via Pay­Pal and Pay­oneer as main trans­ac­tion meth­ods, and high­light­ing the advan­tages of Pay­oneer as a great solu­tion for cor­po­rate trans­fers and suppliers.

What are the regulatory requirements for cross-border payments in China?

Cross-bor­der pay­ments in Chi­na are sub­ject to var­i­ous reg­u­la­to­ry require­ments that aim to pre­vent mon­ey laun­der­ing, tax eva­sion, cap­i­tal flight, and cur­ren­cy spec­u­la­tion. These require­ments dif­fer depend­ing on the nature and pur­pose of the pay­ment, such as trade-relat­ed, ser­vice-relat­ed, cap­i­tal-relat­ed, or per­son­al-relat­ed. Some of the com­mon require­ments are:

• Reg­is­tra­tion. For­eign busi­ness­es and indi­vid­u­als who want to make or receive cross-bor­der pay­ments in Chi­na need to reg­is­ter with the rel­e­vant author­i­ties, such as the State Admin­is­tra­tion of For­eign Exchange (SAFE), the Min­istry of Com­merce (MOF­COM), or the local tax bureau. The reg­is­tra­tion process may involve pro­vid­ing infor­ma­tion such as busi­ness license, tax iden­ti­fi­ca­tion num­ber, bank account details, con­tract details, etc.
• Doc­u­men­ta­tion. Cross-bor­der pay­ments in Chi­na gen­er­al­ly require sup­port­ing doc­u­men­ta­tion to prove the authen­tic­i­ty and legit­i­ma­cy of the pay­ment. The doc­u­men­ta­tion may include invoic­es, con­tracts, cus­toms dec­la­ra­tions, tax receipts, audit reports, etc. The doc­u­men­ta­tion needs to be sub­mit­ted to the remit­ting or receiv­ing bank for ver­i­fi­ca­tion and approval before the pay­ment can be processed.
• Quo­ta. Cross-bor­der pay­ments in Chi­na may be sub­ject to quo­ta lim­its that restrict the amount or fre­quen­cy of the pay­ment. The quo­ta lim­its may vary depend­ing on the type of pay­ment, the type of cur­ren­cy, the type of enti­ty or indi­vid­ual, and the type of bank account. For exam­ple, for­eign busi­ness­es can only remit up to US$50,000 per year from their RMB set­tle­ment accounts to their over­seas accounts with­out pro­vid­ing documentation.
• Tax­a­tion. Cross-bor­der pay­ments in Chi­na may be sub­ject to tax­a­tion that affects the net amount of the pay­ment. The tax­a­tion may include val­ue-added tax (VAT), with­hold­ing tax, income tax, stamp duty, etc. The tax­a­tion rates and rules may depend on the type of pay­ment, the type of enti­ty or indi­vid­ual, the type of cur­ren­cy, and the tax treaty between Chi­na and the oth­er country.

These reg­u­la­to­ry require­ments may change over time as Chi­na adjusts its poli­cies and reforms its sys­tems. There­fore, for­eign busi­ness­es and indi­vid­u­als need to keep abreast of the lat­est devel­op­ments and con­sult with pro­fes­sion­al advi­sors before mak­ing or receiv­ing cross-bor­der pay­ments in China.

What are the payment systems and channels for cross-border payments in China?

Cross-bor­der pay­ments in Chi­na can be made or received through var­i­ous pay­ment sys­tems and chan­nels that have dif­fer­ent fea­tures and func­tions. Some of the major pay­ment sys­tems and chan­nels are:

• The Soci­ety for World­wide Inter­bank Finan­cial Telecom­mu­ni­ca­tion (SWIFT). SWIFT is a glob­al net­work that enables finan­cial insti­tu­tions to send and receive secure and stan­dard­ized mes­sages for cross-bor­der pay­ments. SWIFT sup­ports over 200 coun­tries and ter­ri­to­ries and over 150 cur­ren­cies. SWIFT is wide­ly used by banks and oth­er finan­cial insti­tu­tions for large-val­ue and urgent payments.
• The Cross-Bor­der Inter­bank Pay­ment Sys­tem (CIPS). CIPS is a domes­tic pay­ment sys­tem that allows cross-bor­der trans­ac­tions in RMB. CIPS was launched by the Peo­ple’s Bank of Chi­na (PBOC) in 2015 to facil­i­tate the inter­na­tion­al­iza­tion of RMB and pro­vide an alter­na­tive to SWIFT. CIPS sup­ports both batch pro­cess­ing (low-val­ue) pay­ments and real-time gross set­tle­ment (RTGS) (high-val­ue) pay­ments. CIPS has over 1,000 direct and indi­rect par­tic­i­pat­ing banks in over 100 coun­tries and regions.
• Pay­Pal. Pay­Pal is a glob­al online pay­ment plat­form that allows indi­vid­u­als and busi­ness­es to send and receive pay­ments across bor­ders. Pay­Pal sup­ports over 200 mar­kets and 25 cur­ren­cies. Pay­Pal is wide­ly used by e‑commerce plat­forms, online mer­chants, and free­lancers for small-val­ue and con­ve­nient payments.
• Pay­oneer. Pay­oneer is a glob­al pay­ment ser­vice provider that spe­cial­izes in cross-bor­der pay­ments for busi­ness­es and pro­fes­sion­als. Pay­oneer sup­ports over 200 coun­tries and ter­ri­to­ries and 150 cur­ren­cies. Pay­oneer is wide­ly used by e‑commerce plat­forms, online mar­ket­places, dig­i­tal agen­cies, and sup­pli­ers for medi­um-val­ue and cost-effec­tive payments.

These pay­ment sys­tems and chan­nels have dif­fer­ent advan­tages and dis­ad­van­tages in terms of speed, cost, con­ve­nience, secu­ri­ty, and com­pli­ance. For­eign busi­ness­es and indi­vid­u­als need to com­pare and eval­u­ate dif­fer­ent options and choose the most suit­able one for their cross-bor­der pay­ment needs in China.

What are the best practices for cross-border payments in China?

Cross-bor­der pay­ments in Chi­na can be chal­leng­ing due to the com­plex reg­u­la­to­ry envi­ron­ment, cur­ren­cy con­trols, and pay­ment sys­tems. How­ev­er, there are some best prac­tices that can help for­eign busi­ness­es and indi­vid­u­als to make or receive cross-bor­der pay­ments in Chi­na more smooth­ly and effi­cient­ly. Some of the best prac­tices are:

• Plan ahead. For­eign busi­ness­es and indi­vid­u­als need to plan ahead for their cross-bor­der pay­ment needs in Chi­na and antic­i­pate the poten­tial issues and risks. They need to research the rel­e­vant rules and reg­u­la­tions, choose the appro­pri­ate pay­ment sys­tems and chan­nels, pre­pare the nec­es­sary doc­u­men­ta­tion and infor­ma­tion, bud­get for the costs and tax­es, and mon­i­tor the exchange rates and mar­ket conditions.
• Com­mu­ni­cate clear­ly. For­eign busi­ness­es and indi­vid­u­als need to com­mu­ni­cate clear­ly with their coun­ter­par­ties, banks, and oth­er par­ties involved in their cross-bor­der pay­ments in Chi­na. They need to con­firm the pay­ment details, such as the amount, cur­ren­cy, account num­ber, ben­e­fi­cia­ry name, pur­pose, etc., before ini­ti­at­ing or accept­ing the pay­ment. They also need to keep track of the pay­ment sta­tus and noti­fy or fol­low up with the rel­e­vant par­ties in case of any delays or errors.
• Lever­age tech­nol­o­gy. For­eign busi­ness­es and indi­vid­u­als need to lever­age tech­nol­o­gy to facil­i­tate their cross-bor­der pay­ments in Chi­na. They need to use online plat­forms, mobile appli­ca­tions, or direct con­nec­tiv­i­ty to ini­ti­ate or receive pay­ments more con­ve­nient­ly and secure­ly. They also need to use dig­i­tal tools, such as elec­tron­ic invoic­es, e‑signatures, cloud stor­age, etc., to stream­line their doc­u­men­ta­tion and ver­i­fi­ca­tion processes.
• Seek pro­fes­sion­al advice. For­eign busi­ness­es and indi­vid­u­als need to seek pro­fes­sion­al advice from experts who have expe­ri­ence and knowl­edge in cross-bor­der pay­ments in Chi­na. They need to con­sult with accoun­tants, lawyers, tax advi­sors, or con­sul­tants who can help them under­stand the reg­u­la­to­ry require­ments, opti­mize the pay­ment meth­ods, min­i­mize the costs and risks, and resolve any issues or disputes.

Why is Payoneer a great solution for cross-border payments in China?

Pay­oneer is a glob­al pay­ment ser­vice provider that spe­cial­izes in cross-bor­der pay­ments for busi­ness­es and pro­fes­sion­als. Pay­oneer has been oper­at­ing in Chi­na since 2011 and has estab­lished part­ner­ships with major e‑commerce plat­forms, online mar­ket­places, dig­i­tal agen­cies, and sup­pli­ers in Chi­na. Pay­oneer offers many fea­tures and ben­e­fits that make it a great solu­tion for cross-bor­der pay­ments in Chi­na. Some of them are:

• Low cost. Pay­oneer charges low fees for cross-bor­der pay­ments in Chi­na com­pared to oth­er pay­ment sys­tems or chan­nels. Pay­oneer does not charge any fees for receiv­ing pay­ments from oth­er Pay­oneer users or from e‑commerce plat­forms or online mar­ket­places that are inte­grat­ed with Pay­oneer. Pay­oneer also offers com­pet­i­tive exchange rates for con­vert­ing currencies.
• Fast speed. Pay­oneer enables fast speed for cross-bor­der pay­ments in Chi­na com­pared to oth­er pay­ment sys­tems or chan­nels. Pay­oneer can process pay­ments with­in min­utes or hours depend­ing on the pay­ment method and the des­ti­na­tion coun­try. Pay­oneer also pro­vides real-time noti­fi­ca­tions and track­ing for payments.
• High con­ve­nience. Pay­oneer offers high con­ve­nience for cross-bor­der pay­ments in Chi­na com­pared to oth­er pay­ment sys­tems or chan­nels. Pay­oneer allows users to send and receive pay­ments through var­i­ous meth­ods, such as bank trans­fers, deb­it cards, e‑wallets, or local bank accounts. Pay­oneer also pro­vides online plat­forms, mobile appli­ca­tions, and direct con­nec­tiv­i­ty for easy access and man­age­ment of payments.
• Strong secu­ri­ty. Pay­oneer ensures strong secu­ri­ty for cross-bor­der pay­ments in Chi­na com­pared to oth­er pay­ment sys­tems or chan­nels. Pay­oneer uses advanced encryp­tion, authen­ti­ca­tion, and fraud pre­ven­tion tech­nolo­gies to pro­tect the data and funds of users. Pay­oneer also com­plies with the rel­e­vant laws and reg­u­la­tions and main­tains the nec­es­sary licens­es and cer­ti­fi­ca­tions in the coun­tries where it operates.
• High com­pli­ance. Pay­oneer sup­ports high com­pli­ance for cross-bor­der pay­ments in Chi­na com­pared to oth­er pay­ment sys­tems or chan­nels. Pay­oneer helps users to meet the reg­u­la­to­ry require­ments, such as reg­is­tra­tion, doc­u­men­ta­tion, quo­ta, and tax­a­tion, by pro­vid­ing guid­ance, tools, and ser­vices. Pay­oneer also works close­ly with the author­i­ties and part­ners in Chi­na to ensure the smooth and legal flow of payments.

Pay­oneer is a great solu­tion for cross-bor­der pay­ments in Chi­na for for­eign busi­ness­es and indi­vid­u­als who want to save mon­ey, time, and has­sle, while enjoy­ing the fea­tures and ben­e­fits of a glob­al pay­ment ser­vice provider.

Frequently Asked Questions

Sources:

1. State Admin­is­tra­tion of For­eign Exchange | Reg­u­la­tions on For­eign Exchange Administration
2. Min­istry of Com­merce | Mea­sures for For­eign Invest­ment Infor­ma­tion Reporting
3. State Tax­a­tion Admin­is­tra­tion | Announce­ment on Mat­ters Con­cern­ing With­hold­ing Tax on Income Derived by Non-res­i­dent Enter­pris­es from China
4. Bloomberg | China’s Fledg­ling Cross-Bor­der Pay­ments Sys­tem Grows Its Reach
5. PNC Insights | Treasurer’s Guide to Chi­na Payments
6. SWIFT | Home
7. CIPS | Home
8. Pay­Pal | Home
9. Pay­oneer | Home