Five third-party payment firms have received the green light to handle yuan-denominated cross-border payment in Shanghai's free trade zone, the Shanghai branch of China's central bank said on Tuesday.
The Shanghai Head Office of the People's Bank of China (PBoC) said that Allinpay, 99Bill, ChinaPay, Dongfang Electronics and Shengpay are now allowed to process cross-border payment in the Chinese currency Renminbi for cross-border trade in the China (Shanghai) Pilot Free Trade Zone.
The Shanghai trade zone was launched in September to spearhead the yuan's international use and financial liberalization, among other reforms to support free trade.
Under the program, the five payment firms will each open a cross-border Renminbi account at the Shanghai branch of Industrial and Commercial Bank of China, Bank of China, China Construction Bank, China Merchants Bank and China Minsheng Bank to park provisions for cross-border yuan payment.
"From credit card holders to third-party payment organizations, banks and merchants, they will all price and settle with yuan, which can avoid risks brought by exchange rate fluctuations," said Sun Zhanping, ChinaPay's general manager.
Although the preferential policy for cross-border yuan payment is in place, the number of websites that can support such a service is few at present.
"ChinaPay has contacted a number of foreign airlines and hotels," said Sun.
"But to support Renminbi cross-border payment, foreign enterprises need to open Renminbi accounts and get approval from their administration," he said. "It needs time."
Tuesday's move is the first of a slew of concrete measures expected to come out this week after the PBOC announced in December a 30-point guideline supporting financial liberalization in the Shanghai free trade zone.
According to the central bank's guideline, companies that have online payment service licenses and are either incorporated in Shanghai or run subsidiaries in the free trade zone can provide Renminbi settlement for cross-border trade of goods and services.
According to global transaction services organization SWIFT, the Renminbi climbed to the eighth most-used currency for payment in December and overtook the euro as the second most-used currency for trade finance in October.