China continues its expansion and growth into different industries all over the globe. It is growing and more pressure is being put on it to fix the B2B cross-border payment bottleneck that afflicts the current system. Due to China's rules that govern cross-border transactions, B2B Payment problems can be an issue for small and medium-sized companies. Businesses that operate in China with SMEs are also affected by the B2B payments problem. Extra resources
Monopoly in Chinese Banking B2B Payment Monopoly
There are three choices for making B2B payments to China. Bank transfer called telegraphic transfer, is the most common. Telegraphic transfers are the most efficient way to send cross-border money, even to Chinese businesses located in mainland China. This option is especially difficult for SMEs since they may not be able to obtain the required capital, documentation or other requirements to allow Chinese bank transfers or make payments to China.
Transfers to banks typically take between five and seven business days from the date of the transaction. A recipient business may have to ship paperwork and personnel back to China when the money has been received.
Even even if newly-established companies meet the requirements to send and receive funds via telegraphic transfer there's a problem with Chinese banks blocking access to bank transfers for smaller financial institutions and non-banking companies. China currently has over 4500 banks authorized to accept and send bank transfers.
While this is a significant number however, it's not enough to satisfy the needs of the market. The numerous cross-border trade transactions between China and mainland China has caused the system to not be able to meet China's emerging market.
Electronic Payments
Many mainland Chinese consumers are now making electronic payment. In 2018, 92% (or 47% in rural China) used their smartphones every day to purchase goods and services. WeChat Pay is the main service provider. Alipay is also a popular option. It is a simple payment that is made in just a few seconds. Just scan the QR code that is on the seller's site and then pay the buyer's mobile phone.
The applications are accessible for foreign businesses who want to market their products to Chinese tourists. The ease of using electronic payment greatly increases the likelihood that Chinese tourists will buy goods. In reality, their purchases could account for 25% of the sales of brands (in millions of dollars) in the course of a single year. But, businesses must register with the Chinese payment system so that their sales can be processed by the system. For firms with limited business contacts and/or business activity in China this can be an enormous challenge.
Cash on Delivery (COD).
Cash On Delivery is one of the most popular payment method used by Chinese consumers today. It is more well-known than bank transfers because it is accessible for those who don't have online accounts and those who don't have the technical skills. COD is a preferred method of payment since buyers are able to see the quality and condition of goods prior to purchasing them. The seller is paid a tiny amount, and the non-banking service provider handles this service. So, ultimately everyone wins through this system. Dangdang and Amazon are the largest third-party non-banking payment services providers.
However, this method is not without its drawbacks. The third party involved in the transaction must be paid to be able to process and deliver the payment. Third-party transaction/service fees may cause more difficulty for the seller or customers to pay their bills. It is beneficial for both the customer and seller to remove third parties from transactions. This can streamline the delivery of goods, services, and payment movement from customers to sellers.
Financial Sector Innovation Driven by SMEs
The majority of foreign trade was sourced from mainland Chinese small and medium-sized enterprises, accounting for over 60% in 2015. They are the ones responsible for the rapid development and implementation of fintech solutions to cross-border issues in e-commerce and. Presently, SMEs on the mainland China are the primary cause of the disruption to the Chinese banking system and also for the radical shifts in the way that cross-border payments are handled within China and internationally. SMEs are also able to serve niche areas that established companies cannot. This makes it more difficult to the Chinese banking industry to streamline and simplify commercial transactions in order smaller, less established companies can expand to meet China's growing demands for a commercial industry.
As the belt road project grows in popularity and larger enterprises must concentrate on fulfilling the Chinese government's exacting requirements to get their businesses in line, small and medium-sized enterprises tend to cater to the needs for the poor and less well-off. They require products that are affordable and easily accessible for the population they serve.
B2C and Fintech
Aleta Planet's solutions for the cross-border bottleneck problem are long-term. The process of transferring payments is quicker than conventional bank transfers. Additionally, it allows simple transaction that is hassle-free, meaning it fuels growth in local industries. These innovations can be used to boost growth in the SME and fintech industries. Additionally, these technological advances boost international B2C commerce spending. In turn, this drives the development and application of fintech solutions in B2C transactions.
It is essential to ensure that the Chinese border doesn't hinder the movement of money or goods as the Chinese economy grows more focused on consumers. AP-1 Business allows Chinese suppliers to receive payments faster.
Fintech to Save the Day
Fintech companies have realized the need for better services. Their clients, small and medium-sized enterprises, sellers on e-commerce sites, as well as emerging tech companies are calling for better services and financial solutions. Fintech companies combine technology, finance and creativity to develop new solutions that lower the barriers to entry for SMEs and make it easier to do business.
They are aiming to help make cross-border B2B transactions easier to access, simpler to manage, and easier to use, which will make them a preferred way to do Chinese business. Aleta Planet is one such company that is leading this trend. Aleta Planet has created a system that is based on the UnionPay network in order to make it easier for payments in and outside of China. It makes routine payments by foreigners possible.
AP-1 Business
The AP-1Business account is a bank account that can be accessible by companies outside China. AP-1 Business delivers transactions in T+1. This is the most appealing thing about it. As a contrast, banks typically make bank transfers available at a rate of T+5 or greater. Because AP-1 business rides on the UnionPay network, and the payment is made from an overseas UnionPay account (AP-1Business) to an onshore UnionPay address that belongs to the provider, in China, this ensures quick access to payments.
There are many benefits to AP-1Business. All the advantages of AP-1 business make it attractive for foreign companies doing business with Chinese businesses.
Features
All-in-One Service
AP-1 Business makes it easy for customers to transfer, receive, or process remittances. This service is available by people from abroad. Owners and shareholders from outside the country can open business accounts through AP-1 Business. The AP-1Business service is accessible to all businesses regardless of whether the director of the company is physically located in Singapore.
AP-1 Business is able to provide exceptional customer service to its customers and all-in-one service because it's part of the UnionPay platform. UnionPay platform is accessible in China through all Chinese banksand financial institutions, and is fully operational. AP-1 Business has eliminated the middleman with this platform.
Contrary to banks that have to transfer money via other intermediary banks, the money is transferred through AP-1 Business can be credited directly into the recipient's' bank account. AP-1 Business also allows users to withdraw money from ATMs. It is supported by Visa and Huawei Pay. This ATM cash withdrawal facility will be operational in the second quarter of 2021.
Attractive rates for Forex
Another great feature of AP-1 Business are its forex (FX) rate. AP-1 Business offers the most direct rates for FX (SGD and RMB) to China through the UnionPay network. These FX rate are attractive when you consider other online payment providers offer lower FX rates and charge customers for moving funds across borders. A-1 Business is committed to ensuring that customers get the best FX rates for international payments.
There are no minimum deposit or account balance requirements.
Contrary to other business accounts AP-1 Business doesn't require customers to maintain a minimum balance or to make minimum deposits. The lack of a minimum balance requirement and deposit requirements has allowed certain SMEs to continue their operations throughout the COVID-19 pandemic and to recover, although slow. AP-1 Business aims provide modern financial solutions that cannot be fulfilled by the current banking sector.
AP-1 Business customers have the ability to easily pay cross-border using China through the AP-1 Business card. The card functions similar to an ordinary debit card and is able to be used for purchase. Payments are made directly from account balances.
Using an AP-1 Business card allows customers to cut down on time