The global financial landscape is continuously evolving, with digital payment innovations and regulatory developments creating new opportunities and challenges for businesses and consumers worldwide. From enhanced cross-border settlement solutions to stricter compliance measures, the industry is witnessing significant transformations that promise greater efficiency, security, and inclusivity.
Central Bank Policies and Market Developments
Recent policy adjustments and market data reflect the growing emphasis on facilitating international trade and investment through streamlined financial services.
Multinational Corporate Fund Management Simplification
To support high-level opening and reform, the People's Bank of China and State Administration of Foreign Exchange have optimized the multinational company cross-border fund pool pilot policy across ten provinces and municipalities. This initiative allows enterprises to manage domestic and foreign currency funds more efficiently, reducing operational complexities and enhancing capital utilization.
Cross-Border RMB Settlement Volumes
In November 2024, cross-border RMB settlement under the current account reached 1.4 trillion yuan, according to central bank data. Goods trade accounted for 1.11 trillion yuan, while service trade and other current items represented 0.29 trillion yuan. Direct investment cross-border RMB settlement recorded 0.69 trillion yuan, with outward investment at 0.26 trillion yuan and foreign direct investment at 0.43 trillion yuan.
Foreign Exchange Administration Priorities
China's State Administration of Foreign Exchange has outlined six priority areas for 2025:
- Enhancing foreign exchange services for the real economy
- Promoting deeper reform and higher-level opening in foreign exchange
- Preventing and mitigating external冲击 risks
- Strengthening and improving foreign exchange supervision
- Enhancing foreign exchange reserve management and operation
- Advancing comprehensive strict governance of the Party
Regional Initiatives Enhancing Payment Accessibility
Jiangsu's Tourism Payment Convenience Measures
Jiangsu province has implemented new measures to improve payment convenience for international visitors. The policies focus on expanding acceptance of foreign bank cards at cultural and tourism merchants, optimizing foreign card payment services, enriching foreign currency exchange options, and providing subsidies for foreign card transaction fees. The province also aims to increase digital RMB acceptance coverage at 4A-level tourist attractions, airports, and high-speed rail stations.
Hong Kong's Octopus Expands Mainland Payment Services
Octopus, Hong Kong's popular payment system, has expanded its services in mainland China. Users can now scan WeChat Pay QR codes at mainland merchants using the Octopus UnionPay card stored in their Octopus Wallet. The company has also enhanced taxi payment networks in Hong Kong to support popular electronic wallets from both mainland China and Hong Kong.
Cross-Border Payment Ecosystem Developments
UnionPay International Expands Global Connectivity
UnionPay International has strengthened its global presence through multiple partnerships:
- Laos Connection: The payment giant has established QR code interoperability with Laos' National Payment Network (LAPNet). Consumers can use the UnionPay app, domestic wallets supporting "UnionPay Network Payment Platform," and overseas UnionPay partner wallets to make scan-code payments at merchants in Laos.
- Wise Partnership: UnionPay International has partnered with Wise to enhance cross-border remittance services from outside China to within the country. The upgraded service expands recipient eligibility from Chinese residents to all UnionPay cardholders in China and offers 24/7 service availability with real-time fund crediting.
Tenpay Global and Ria Money Transfer Collaboration
Tencent's cross-border payment platform, Tenpay Global, has partnered with Ria Money Transfer to enable global users to send funds to themselves or family members through Ria's online and offline channels. Recipients can receive funds directly into their WeChat Pay balance or linked bank accounts.
ZTO Pay Launches Cross-Border Logistics Payments
ZTO Pay has processed its first international logistics payment transaction, marking a milestone in its cross-border payment solutions for the logistics industry. The company has developed specialized payment solutions addressing industry pain points after completing full-link connectivity for international logistics receivables and payments.
Regulatory Compliance and Enforcement
Landmark USDT Conversion Case
A noteworthy case involving illegal foreign exchange activities through virtual currency has concluded with convictions. Three individuals used USDT transactions as a medium for foreign exchange trading, completing over 650 transactions worth approximately 30 million yuan within months. The court sentenced them to prison terms ranging from one and a half to five years for illegal business operations.
Australia Strengthens Crypto AML Measures
Australia's financial intelligence agency, AUSTRAC, has established an internal cryptocurrency working group to identify and take action against crypto ATM providers non-compliant with anti-money laundering laws. The agency has observed increasing use of cryptocurrencies for money laundering, scams, and money mule activities, prompting stricter compliance requirements for digital currency exchanges offering crypto ATM services.
UK Card Fee Regulations
The UK Payment Systems Regulator (PSR) is advancing plans to cap fees that Visa and Mastercard charge UK merchants for European online purchases. The regulator noted that following Brexit, the card networks increased cross-border interchange fees significantly—raising debit card fees from 0.2% to 1.15% and credit card fees from 0.3% to 1.5%—costing businesses an additional £150-200 million annually.
Global Payment Trends and Metrics
RMB Internationalization Progress
According to SWIFT data, the Chinese renminbi accounted for 3.89% of global payment value in November 2024, reclaiming its position as the world's fourth most active payment currency. When excluding eurozone international payments, the RMB ranked fifth with a 3.02% share.
FedNow Service Expansion and Pricing
The Federal Reserve has announced new pricing standards for its FedNow instant payment service, effective January 1, 2025. The service, launched in July 2023, processed 414,827 transactions between January and August 2024, with participating financial institutions growing from 400 to nearly 1,000. The FedNow program is projected to have operating expenses of $245.5 million in 2025.
Indonesia's NFC-Based Payment Initiative
Indonesia's central bank is testing QRIS Tap based on NFC technology as an alternative transportation payment method in Jakarta and surrounding areas, with plans to launch in the first quarter of 2025. The pilot is initially being conducted on Damri buses with participation from relevant stakeholders including the Indonesian Payment System Association.
Industry Investments and Partnerships
Major Stock Buybacks and Dividend Increases
Mastercard has announced a new $12 billion stock repurchase program and increased its quarterly dividend from 66 cents to 76 cents per share. The new buyback authorization will take effect after the completion of the previously announced $11 billion repurchase program.
Faster Cross-Border Transfers
Visa will enable faster remittances through Visa Direct starting April 2025, allowing funds to reach US bank accounts within one minute. The service will allow consumers, businesses, and governments to deposit funds in real-time to bank accounts linked to eligible debit cards.
Strategic Fintech Collaborations
Several significant partnerships are shaping the future of cross-border payments:
- Paxos and Standard Chartered: The blockchain and tokenization platform has partnered with Standard Chartered to enhance the management of global dollar and Lift Dollar reserves. The collaboration strengthens infrastructure supporting trusted digital assets in Singapore and the UAE.
- Shift4 Acquisition: The US-based payment technology company has acquired UK payment solutions provider Card Industry Professionals, expanding its global footprint.
- Affirm Funding: The buy-now-pay-later provider has secured up to $4 billion in lending capacity through a partnership with Sixth Street, which could potentially support over $20 billion in loans over three years.
- Quantix Debt Financing: The UAE fintech company has obtained $500 million in asset-backed securitization financing from Citi Bank to support its CashNow consumer lending platform.
- PalmPay and Jumia Partnership: The Nigerian fintech company has collaborated with e-commerce platform Jumia to enhance payment experiences for customers using PalmPay wallet on Jumia's platform.
- FIS Acquisition Rumors: The US banking and payment technology giant is reportedly acquiring London-based fintech Demica for approximately $300 million to enhance its supply chain finance capabilities.
- Morgan Stanley and Wise: The investment bank has selected Wise Platform to provide foreign exchange international settlement capabilities for its corporate clients, becoming the first investment bank to enable these enterprise payment functions on Wise's infrastructure.
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Frequently Asked Questions
What are the benefits of multinational company cross-border fund pools?
Cross-border fund pools allow multinational corporations to centralize their domestic and foreign currency management, improving capital efficiency and reducing operational costs. They simplify liquidity management across different jurisdictions and currencies, enabling better treasury management and enhanced financial control.
How does RMB internationalization affect global businesses?
As the RMB becomes more widely used in international trade and finance, businesses gain an additional currency option for settlements, potentially reducing exchange rate risks and transaction costs. The currency's growing acceptance also facilitates easier trade with Chinese partners and access to China's financial markets.
What should businesses know about cross-border payment regulations?
Businesses engaging in cross-border payments must comply with anti-money laundering (AML) regulations, know-your-customer (KYC) requirements, and international sanctions guidelines. Regulations vary by jurisdiction, so working with compliant payment providers and staying informed about regulatory changes is essential for legal compliance.
How are instant payment systems changing cross-border transactions?
Instant payment systems like FedNow and various real-time gross settlement systems are reducing transaction times from days to seconds or minutes. This acceleration improves cash flow for businesses, enhances consumer experience, and reduces settlement risks associated with delayed payments.
What security measures are important for cross-border payments?
Robust security measures include encryption technologies, multi-factor authentication, transaction monitoring systems, and compliance with international security standards. Regular security audits, employee training, and partnership with reputable payment providers are crucial for maintaining secure cross-border transactions.
How can businesses optimize their cross-border payment processes?
Businesses can optimize cross-border payments by selecting efficient payment partners, leveraging favorable exchange rates, consolidating transactions where possible, automating payment processes, and staying informed about regulatory changes that might affect transaction costs or processing times.