Analysis of cross-border payment pain points and overseas collection solutions between payment institutions and traditional banks

In the current global economic environment, the rise of cross-border e-commerce has diversified payment needs. However, this model also exposes some pain points for payment institutions and traditional banks in cross-border payments. This article will focus on analyzing the pain points of payment institutions and traditional banks, while exploring effective solutions for overseas collection accounts.

Pain points of payment institutions

First, third-party payment institutions face significant challenges in terms of authenticity and compliance. Since cross-border e-commerce transaction information is transmitted in electronic form, electronic documents are easily tampered with, making it difficult to verify the authenticity of the transaction. In addition, the flexibility of the cross-border model makes it difficult to obtain legal certificates, and the lack of cargo flow data that matches the capital flow increases the difficulty of foreign exchange supervision. Third-party payment institutions not only need to comply with China’s regulatory requirements, but also need to take into account the government laws and regulations, financial supervision and anti-money laundering policies of the target market.

Secondly, the current restrictions on foreign exchange regulations put payment institutions at a disadvantage in cross-border B2B payment and settlement. Multiple restrictions, such as a limit of US$50,000 per transaction, make it impossible for payment institutions to handle this type of business, and B2B payments are still mainly dominated by traditional banks. The self-built B2B platform has not yet been perfected, and most cross-border payments between enterprises still need to be completed offline.

Finally, cross-border settlement channels are subject to the influence of domestic institutions overseas, and overseas users are more inclined to use payment tools with higher local recognition. Although order transactions are completed online, the settlement methods of B2B business are still complex and traditional, and it has not been possible to achieve comprehensive online settlement of international trade.

Current status and solutions of overseas collection accounts

In terms of overseas collection, international platforms such as Amazon allow third-party sellers to choose to transfer sales funds directly to bank accounts in the destination country. Starting from June 25, 2018, sellers can fill in their Chinese domestic savings card number in the Amazon Seller Center to achieve convenient payment [[2]]. Although this method is safe and fast, the handling fee is still higher (1.25%) compared to third-party charges. Therefore, many sellers choose third-party collection companies, and the handling fee is generally between 0.4% and 1% [[2]] .

When it comes to traditional foreign trade payment collection methods, overseas bank accounts and Hong Kong bank accounts have become common choices. Overseas accounts require registering a local company, which is not suitable for most sellers. Due to its advantages as a free trade port, bank accounts in Hong Kong, China, allow personal identity registration and are convenient for receiving overseas currency. However, personal registration accounts with non-Hong Kong identity are subject to deposit restrictions and the procedures are cumbersome [[3]].

To sum up, due to the dual challenges of technology and supervision in the field of international cross-border payments, payment institutions and traditional banks each have their own advantages and disadvantages. When choosing a payment method, sellers need to consider fees, security and convenience to find the solution that best suits their business needs.