Corporates and individuals in Hong Kong and the Guangdong free trade zones are able to settle cross-border claims through electronic cheques, representatives from the Guangzhou branch of the People’s Bank of China and the Hong Kong Monetary Authority (HKMA) jointly announced on July 22.  Supporting documents for trade transactions can be submitted digitally as well.

 

E-cheques, launched in Hong Kong last December, are the electronic equivalent to paper cheques, issued and deposited in PDF format through the online banking systems of participating banks.  In Hong Kong, they are cleared through Hong Kong Interbank Clearing Limited, which says nearly 140,000 e-cheques amounting to HK$4.2 billion (US$540 million) have been cleared since the launch.

 

“In view of closer business relationships between Hong Kong and Guangdong, corporates and citizens have an increased need for cross-border payments,” said Howard Lee, JP, senior executive director at the HKMA during the launch event.  “Therefore, it is important to build a mature online payment system between the two jurisdictions.”

 

HSBC's Kee Joo Wong, Asia-Pacific head of global liquidity and cash management, comments in an e-mail that corporate users of the scheme will benefit from quicker cross-border payment settlement.  E-cheques issued by banks in Hong Kong and deposited (online) with banks in the Guangdong FTZs will be settled on the next business day.

 

“Customers can now complete a payment online – even if it is a cross-border payment,” he notes.  “They no longer need to visit a brick-and-mortar branch to process payments.”

 

Fifteen banks – including China Guangfa Bank (CGB), ICBC, and HSBC – participate in the trial phase.  Corporate and individual clients of the banks in Hong Kong and the three free trade zones of Guangdong province (Qianhai, Nansha and Hengqin) can settle cross-border trade claims using the system.  The e-cheques can be denominated in HK-dollar, US-dollar and renminbi; however, renminbi denominated cheques are not yet available to corporate users.  Supporting documents for cross-border trade settlement, such as bills of lading, can be uploaded and attached to the e-cheques in PDF format.

 

Retail customers shopping for goods online across the border may be the quickest to embrace the new payment method.  “The introduction of e-cheque settlement between Hong Kong and Guangdong is in line with the rapid development of China’s internet industry and increasing demand for cross-border payment,” commented Jingwu Wang, chairman of the PBOC Guangzhou branch.  “PBOC Guangzhou will cooperate with the HKMA to prompt financial market development and make Guangdong the leader in China’s financial reform.”