Cross-border settlement refers to the act of transferring funds across borders and regions by using certain settlement tools and payment systems to settle international debts and credits arising from international trade (trade in goods, trade in services), international investment, etc. between two or more countries or regions. At present, offline cross-border trade and online B2B cross-border trade are mainly based on traditional bank settlement, while online B2C cross-border trade is dominated by international credit card organizations and third-party payment institutions. Third-party payment institutions represented by Alipay International are gradually emerging in cross-border trade settlement with the help of cross-border e-commerce platforms. In April 2019, the State Administration of Foreign Exchange issued the “Notice of the State Administration of Foreign Exchange on Issuing the
With the rise of cross-border e-commerce on the Internet, cross-border payment and settlement are getting closer to our daily lives. White-collar mothers are enthusiastic about overseas shopping, and small and micro merchants have also discovered business opportunities in overseas retail. Cross-border trade, which was dominated by offline in the past, now appears more and more frequently in cross-border e-commerce B2B and B2C trade. With the popularization of cross-border trade, the channels for cross-border payment and settlement are also becoming more diversified and convenient. Although banks have monopolized the settlement business of cross-border trade in the past few hundred years, driven by the Internet and information technology, third-party payment has shown an amazing momentum in cross-border settlement.
The “2018 China Cross-border E-commerce Market Data Monitoring Report” shows that the scale of China’s cross-border e-commerce transactions reached 9 trillion yuan in 2018, an increase of 11.6% year-on-year. The international market is even larger. According to iMedia Consulting data, the scale of global B2C cross-border e-commerce transactions in 2018 increased by 27.5% year-on-year, and is expected to exceed 800 billion US dollars in 2019. Faced with such a huge market, third-party payment institutions are gearing up to apply for cross-border payment licenses in order to get a piece of the pie. Although the user groups targeted by cross-border e-commerce platforms are different from the high-asset, high-net-worth high-quality customers of traditional banks, their growing trend has to attract the attention of all parties: first, the technology behind this rapid growth is coveted by many financial institutions including banks, and second, its compliance issues and money laundering risks are of concern to regulatory authorities.