Cross-border payment can be divided into the traditional cross-border remittance model of commercial banks and the cross-border Internet payment model with the participation of third-party payment institutions.
(I) Traditional cross-border remittance model of commercial banks
This model can be understood as an online order and offline payment model, that is, domestic buyers query and search overseas product information through cross-border e-commerce platforms, select sellers, and then “understand transaction information” from overseas sellers, send order information, and after the buyer completes the payment, the overseas seller will ship the goods. In this model, buyers need to purchase foreign exchange through bank counters or online banks at the request of overseas sellers, fill out remittance application forms, remit the order amount to the designated account of overseas sellers, and bear the risk of overseas sellers not shipping after remittance.
(II) Cross-border Internet payment model with the participation of third-party payment institutions
This model refers to domestic buyers selecting the goods they want to buy through cross-border e-commerce platforms, and then paying the corresponding amount to third-party payment institutions through bank cards bound to the accounts of third-party payment institutions; after the third-party payment institutions complete the foreign exchange conversion with the cooperative banks, the third-party payment institutions transfer the payment to the bank where the overseas sellers open accounts.
Stimulated by the development of cross-border e-commerce, cross-border payments continue to innovate, the popularity of credit cards and debit cards gradually increases, online banking and mobile payments are widely used in cross-border payments, and third-party payment tools such as PayPal have become one of the mainstream cross-border payment methods. In the following content of this chapter, the commonly used payment methods in cross-border e-commerce will be introduced in detail.