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
To open a bank account in China, you need to visit a local branch of a bank that accepts foreign customers and provide the required documents and information. The documents and information may include your passport, visa, residence permit, business license, tax identification number, etc. The bank may also ask you to fill out an application form and sign a contract. The bank may charge you some fees for opening and maintaining the account.
To exchange currency in China, you need to visit an authorized currency exchange outlet, such as a bank, a hotel, or an airport. You need to present your passport and fill out a foreign exchange form. You may also need to provide proof of the source and purpose of the currency exchange. The exchange rate may vary depending on the outlet and the market conditions. The outlet may charge you some fees or commissions for the currency exchange.
To transfer money to or from China, you need to use a payment system or channel that supports cross-border transactions in RMB or other currencies. You need to provide the details of the sender and the receiver, such as the name, address, account number, bank name, bank code, etc. You may also need to provide supporting documentation to prove the authenticity and legitimacy of the payment. The transfer time, cost, and limit may vary depending on the payment system or channel and the destination country.
- State Administration of Foreign Exchange | Regulations on Foreign Exchange Administration
- Ministry of Commerce | Measures for Foreign Investment Information Reporting
- State Taxation Administration | Announcement on Matters Concerning Withholding Tax on Income Derived by Non-resident Enterprises from China
- Bloomberg | China’s Fledgling Cross-Border Payments System Grows Its Reach
- PNC Insights | Treasurer’s Guide to China Payments
- SWIFT | Home
- CIPS | Home
- PayPal | Home
- Payoneer | Home