Payment going overseas is riding on the three major trends of China’s increasing cross-border e-commerce trade penetration, the global development of Chinese enterprises, and the strong demand for foreigners to travel to China. As a core segment of the financial service system, new industry trends are ushering in business sectors such as cross-border payment, overseas local payment, and foreign card acquiring.
The growth of the industry is deeply tied to the three core trends of the expansion of China’s cross-border trade, the deepening of corporate globalization operations, and the increase in consumer demand of inbound personnel. It has a solid demand foundation and long-term growth momentum.
CITIC Construction Investment released a research report explaining the situation of various business sectors of payment overseas.
In terms of cross-border payments, four mainstream operating mechanisms have been formed: bank wire transfer, card organization clearing, third-party payment, and blockchain technology models. The industry chain presents an upstream, midstream, and downstream structure of “clearing and settlement – acquiring, remittance, foreign exchange settlement and sales – account wallet”.
Acquisition and remittance are the core profit points of payment institutions. The mainstream rate range for the acquiring link is 2.5% – 3.5%, and the third-party cross-border payment remittance rate is approximately 0.3% – 1.0%.
The industry structure is characterized by high concentration in the upstream and diversified competition in the midstream. Competition among international payment companies is fierce, but the leading pattern of third-party cross-border payment service providers that mainly serve the Chinese market is relatively mature.
The development of cross-border e-commerce and the internationalization of RMB continue to open up incremental space for the industry.
Overseas local payments show significant regional differentiation characteristics.
In the United States, card payment is the mainstream, the four-party clearing model dominates, the penetration rate of electronic wallets increases rapidly, the upstream clearing and card issuing sides of the industry chain are highly concentrated, and the acquirer and wallet sides are relatively dispersed.
In Southeast Asia, the penetration rate of e-wallets exceeds that of the United States, and the electronic payment market size in major countries reaches US$220 billion. The regulatory and pricing systems of various countries are significantly different, and the e-wallet market generally presents a duopoly pattern.
In Japan, cash and credit card payments still dominate. The local card organization JCB has become a global mainstream. The government is actively promoting the increase in the proportion of cashless payments. The card issuance and acquiring end of the industry chain is relatively fragmented.
Foreign card acquiring focuses on the consumption scenarios of foreigners in China, forming four parallel payment methods and a full-process business system.
Driven by policies, major acquiring banks have reduced foreign card handling fees to 1.5%, and third-party agency fees are in the range of 0% – 4%.
The clearing side of the industry is dominated by UnionPay. American Express and Mastercard have deployed domestic markets through joint ventures. The banking side has achieved full scenario coverage. Third-party institutions have focused on the vertical track of small and medium-sized merchants. The overall situation is still in the early stages of development.
However, the industry also faces potential risks such as market price fluctuations, uncertainty in corporate profit forecasts, and technological updates.
In general, payment overseas shows good development prospects under the current trend, but it also requires all participants to pay close attention to market dynamics and actively respond to potential risks to achieve healthy and sustainable development of the industry.
As China’s economy continues to develop and its opening up to the outside world continues to deepen, payment overseas is expected to play an even more important role in the global financial market.
