Payment solution to increase trade in Belt & Road regions
Ten Chinese banks have adopted a cross-border payment service featuring transaction timeliness and realtime traceability as they accelerate their global reach to handle surging complex business needs fueled by the Belt and Road Initiative.
Bank of China, Industrial and Commercial Bank of China, China Construction Bank and seven other domestic banks have adopted the global payments innovation service, an international payment facilitator by the Society for Worldwide Interbank Financial Telecommunication, a member-owned financial institution network.
With another 17 Chinese banks in the pipeline, these participating banks combined handle an estimated 86 percent of all cross-border payment traffic conducted by Chinese banks on the Chinese mainland, according to SWIFT figures released on Tuesday.
“The financial industry has an important role to play in realizing the full potential of the Belt and Road Initiative, from building and maintaining effective infrastructures and processes to support capital flows, to working toward common standards and mitigating risks,” said Alain Raes, SWIFT’s chief executive for Asia Pacific and Europe, the Middle East and Africa.
The global payments innovation service offers Chinese banks faster transactions and improves the banking experience by creating predictable settlement times, transparent bank fees and foreign exchange rates, as well as clear status, according to Xu Jie, deputy general manager of the transaction banking department at China Minsheng Bank.
“The market share of domestic payments is being eaten away by third-party payment firms. Embracing the global payments innovation is the one resort for banks to gain an edge in cross-border payment,” Xu said, adding that US-dollar remittance could be shortened from days to just 15 minutes after his bank adopted the global payments innovation.
The global payments innovation initiative can effectively serve Chinese enterprises that are going global and the construction of the Belt and Road Initiative by enhancing crossborder service capability, said Sun Shangbin, deputy general manager of the clearing department at Bank of China.
According to banking executives, Chinese companies have seen international trade and investment balloon in scale, but its complexity has also risen, as the discrepancy in standards and regulation across economies participating in the Belt and Road Initiative poses a number of challenges, including the absence of a unified communications framework and compliance issues.
“Chinese companies may know their longtime trading partners based in the United States, Japan or Europe, but today we need to deal with emerging business opportunities in more than 60 economies with varying conditions,” said Zhang Xuqing, assistant general manager of the international business division at China CITIC Bank.
“All these have fostered pressing needs to deliver greater speed, transparency and end-to-end tracking in international payments,” he noted.
As a direct result of the speed and transparency afforded by the global payments innovation, banks using the service have seen a significant reduction in friction and as much as a 50 percent fall in their enquiry costs, according to SWIFT figures.