Third-party payment companies to start cross-border business

Chinese third-party payment companies are said to have obtained licenses for the first cross-border settlement pilot programs, a news report said on Wednesday.

The 17 companies have already got oral approval from the State Administration of Foreign Exchange, a source close to the matter told the Shanghai Securities News.

Under the pilot programs, online payment service providers can act as agents to help handle cross-border currency settlements for Chinese shoppers placing orders on overseas websites as well as for those overseas shoppers making purchases on Chinese websites.

According to the news report, the 17 companies are based in five cities in China.

The State Administration of Foreign Exchange only allows them to participate in cross-border settlements in certain business sectors. Some can enter the cross-border trade business and some are able to tap the cross-border education, air tickets and hotel markets.

There are eight companies in Shanghai, including 99bill.com and China PnR. Two companies are based in Shenzhen and four companies are based in Beijing. China’s leading third-party payment company, Alipay, a payment unit of e-commerce giant Alibaba Group, is one of the two Hangzhou-based companies.

Wang Weidong, a third-party payment specialist with iResearch Consulting Group, said that by involving third-party payment companies in cross-border settlements, companies and consumers will be able to get more convenient or even cheaper services when making payment overseas.

"However, the pilot program is on a small scale. The cross-border settlement business can hardly become a new growth point for the 17 companies," said Wang.