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Payment & Settlement

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Payment & Settlement

Payment and Settlement

Payment and settlement refer to the settlement of monetary claims and debts arising from economic and social activities between different economic entities. Payment and settlement products are characterized by low risk, high return and strong business scalability. They process funds collection and payments for customers and support the development of CDB’s core businesses.

RMB payment and settlement products offered by CDB include:

RMB payment and settlement services for domestic organizations

Transfer check

Cashier’s check

Banker’s draft

Commercial acceptance

Bank acceptance

Remittance

Collection on commission

Collection with acceptance

Cash deposit & withdrawal  

In addition to traditional settlement instruments such as check and money order, CDB innovated settlement services and techniques and launched the key account cash management system in 2014 to meet the needs of  corporate clients for centralized capital management and collective allocation, in line with its commitment to the “client-centric” service philosophy. Under the system, cash management service is provided for customers, increasing the coverage of integrated financial services. It allows genuinely win-win cooperation between CDB and the clients.

Cross-border RMB Settlement

I. Cross-border RMB settlement

Cross-border RMB settlement refers to the pricing and settlement functions fulfilled by RMB in cross-border trade, investment, financing and other economic and trade activities, i.e. Chinese enterprises use RMB as the pricing currency for trade in goods and investment and financing activities, and transaction funds are collected and paid in RMB accordingly. CDB provides cross-border RMB settlement for Chinese enterprises operating relevant transactions in compliance with the policies of the People’s Bank of China (PBoC).

II. Benefits of cross-border RMB settlement for enterprises

(i) Optimized management of exchange rate related risks

In the case of enterprises operating both import and export businesses, RMB can be used as the settlement currency to effectively reduce risks of currency mismatch. It also enables them to use the same currency of account for various transactions, thereby avoiding additional administrative costs caused by currency differences.

(ii) Savings in exchange costs

Where transactions are settled in foreign currencies, foreign exchange costs are incurred during payments for imports and collection of payments for exports. In addition, as exchange rates are unavailable between RMB and certain minor currencies, if a transaction is denominated in one of these minor currencies, the company has to convert RMB into USD first, and then buy the minor currency with USD, subjecting it to exchange costs in both conversions. Therefore, RMB settlement will enable the companies to save foreign exchange costs.

(iii) Savings in foreign currency derivative transaction costs

Companies with transactions settled in foreign currencies need to purchase hedging instruments against exchange risks. RMB settlement enable them to save hedging costs.

(iv) Policy supports

To facilitate the use of RMB in cross-border trade, investment and financing activities, the PBoC has set out preferential policies in favor of companies conducting settlement in RMB, including:

(1) All companies in China may choose RMB as the settlement currency for cross-border trade transactions

(2) All exporters of goods are entitled to export tax rebate

(3) It is more convenient to use RMB in cross-border direct investment

(4) Foreign debts (e.g. deferred payment, advance payment and bank guarantee) can be denominated in RMB without taking up any foreign debt quota

(5) Cross-border RMB transactions are regulated based on actual transactions, which further simplifies the transaction process and ensures effective risk control at the same time. The focus is placed on post-transaction regulation rather than pre-transaction approval.

III. We provide quality cross-border RMB settlement service for companies

Today, the RMB is widely used for cross-border trade in goods and services, direct investment, cross-border financing, equity investment, etc. and the PBoC has been encouraging wider use of the RMB in more cross-border businesses. A variety of innovative cross-border RMB products have been launched, e.g. offshore lending, financial leasing, centralized cross-border RMB operations and cross-border e-commerce RMB settlement operated by non-financial institutions.

As the largest development finance institution in the world, CDB has taken the lead in serving national strategies and supporting financial innovations, and is therefore fully committed to providing companies with highly effective and convenient clearing and settlement services regarding the aforementioned cross-border RMB businesses launched by the PBoC, including but not limited to RMB account opening for non-resident institutions, cross-border trade, investment, financing and investment receipts and payments, RMB letter of credit, collections and guarantees. In addition, based on the individual needs of the companies, CDB also provides cross-border RMB financing products and services for clients at different stages of the import/export and foreign investment and financing processes. In doing so, the aim is to ease the financial pressure facing the clients, improve liquidity and ensure smooth progress of relevant trade and investment/financing operations.

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