Analysis on the development status of cross-border e-commerce payment and settlement

In the current global economic environment, the cross-border e-commerce payment and settlement model has gradually evolved and become an important link in international trade. This article will combine information from multiple reference articles to integrate and analyze the development status of cross-border e-commerce payment and settlement.

1. Current application status of traditional payment methods

Traditional cross-border trade usually uses direct payment methods, including remittance, collection, letter of credit and international factoring. Among them, remittance is suitable for payment scenarios with small amounts, while letters of credit are widely used in large-amount payment scenarios due to their protection for buyers and sellers. Remittances are mainly completed by banks through international financial telecommunications networks such as SWIFT, thereby ensuring the safe transfer of funds.

In international trade, there is often a lack of trust between buyers and sellers. The buyer is worried that the seller will not ship the goods after paying in advance, while the seller is worried that the buyer will not pay after the goods are shipped. Therefore, two banks are usually required to act as intermediaries to provide the necessary credit guarantee.

2. The rise of third-party payment institutions

Nowadays, as cross-border B2C trade becomes increasingly complex, traditional payment methods are no longer suitable. Many third-party payment institutions holding cross-border foreign exchange payment licenses have formed stable payment channels that can effectively meet the needs of this emerging market. These institutions use data from cross-border e-commerce platforms to provide exchange services and improve transaction efficiency.

Especially in self-operated B2C cross-border e-commerce platforms, domestic licensed third-party payment institutions are mainly responsible for the platform’s exchange, transfer and other services, thereby promoting the flow of funds between overseas accounts and domestic bank accounts.

3. Characteristics of small-amount B2B cross-border trade

In recent years, small-scale B2B cross-border trade has developed rapidly. Many small overseas merchants purchase goods directly through distributors, which not only reduces the unit price per customer, but also effectively saves labor and trade costs. This model generally reduces the cost of cross-border payment and settlement and adapts to the diverse needs of emerging markets.

4. License requirements for third-party payment institutions

If domestic enterprises carry out cross-border payment business, they must first qualify as a payment institution and hold a “payment business license” issued by the People’s Bank of China. In addition, approval from the State Administration of Foreign Exchange is required, especially when conducting cross-border foreign exchange payment business. If there is no exchange of currency involved, you only need to hold a RMB cross-border payment license.

5. Adapt to new e-commerce needs

The flexibility and efficiency of third-party payment institutions make them more adaptable to the current frequent small-amount transaction needs. Traditional cross-border trade often chooses bank remittances and letters of credit due to the characteristics of large amounts of funds and low transaction frequency. However, in the context of the increasing rise of cross-border e-commerce, convenience and timeliness are more important. Relevant regulatory policies have been gradually relaxed, further promoting the entry and development of third-party payment institutions.

6. Income sources and development opportunities

The main source of income for third-party payment institutions includes channel fees, which are usually charged based on transaction size and number of transactions. At the same time, in response to the needs of different industries, integrated B-side payment solutions provided by institutions have also begun to enter new market opportunities. In addition, institutions may also increase earnings through unconventional income such as exchange rate differences.

To sum up, the field of cross-border e-commerce payment and settlement is undergoing rapid development. The transformation of traditional payment methods into new payment mechanisms will bring greater convenience to future international trade.