This Treasurer’s Guide to China Payments provides an overview of the bank payments landscape and the common domestic payment practices and nuances in China.  While many parallels exist between the major payment systems in the United States and China, companies with global operations should be aware of the differences in practices and instruments.  This information can help you manage your operations in China and improve cash management with the available payment techniques.

Payment Initiation Options

Your payment methods should meet your payment volumes and needs. Domestic Renminbi (RMB) payments in China are generally remitted through the following methods:

Online Banking

Online banking is a standard option for initiating payments, viewing bank account information, and accessing other banking services. Domestic payment transaction details are generally in Chinese, requiring that end-users may need to read or translate Chinese to input or comprehend the full transaction details. Check with your bank to see what multilingual choices might be available.

Branch Banking

You may choose to conduct payments through a Chinese branch by filling out a payment application at the branch, or issuing bank drafts and commercial drafts, etc. Some banks can also initiate transactions through couriering documents to the branch.

Direct Connectivity

Direct connectivity is typically used by companies that have high volume of payments and the technical ability to connect to a bank that provides this service. Initiation methods tend to be more costly than other payment channels. As a result, mid- or smaller-sized companies may decide not to use direct connectivity given the technical complexity and costs.

Cross-Border Payments Considerations

Unlike domestic payments, cross-border payments in China generally require supporting documentation to demonstrate the authenticity of the payment. This requirement differs depending on the type of payment made, for example a capital transaction, trade transaction, dividend, etc.

As cross-border payments require verification of supporting documents by the remitting banks prior to processing, they are processed manually and may take longer than domestic payments. Supporting documentation is usually submitted to the remitting bank either at the branch, or through other means such as courier.

Electronic submission of supporting documentation, for example, via online banking, is becoming more commonplace instead of branch or courier submission. Advances may be coming for these payments in the near future.

Common Payment Channels & Instruments in China

Electronic Payments

The China National Advanced Payment Systems (CNAPS) 中国人民银行现代化支付系统 is the primary domestic electronic payment system in China. Unlike the separation of ACH and wire payment systems in the United States., CNAPS encompasses both ACH-type (low-value) payments and wire-type (Real Time Gross Settlement “RTGS”) payments. They are designated as HVPS (High Value Payment System) 大额实时支付系统 for RTGS payments, and BEPS (Bulk Electronic Payment System) 小额批量支付系统 for low-value payments.

Also part of CNAPS, the Internet Banking Payment System (“IBPS”) ”) 网上支付跨行清算系统 is another channel by which banks that are connected to IBPS may clear and settle low-value payments initiated through online banking in real time. Unlike payments made through HVPS or BEPS, the sender of the payment is able to receive the processing result of the payment in real-time. It is also known as Super Online Banking 超级网银.

Local Clearing System (Same-City Clearing System or Same-City Transaction System) 同城清算系统 transactions where the payer and payee are in the same city. For example, if a payer in Shanghai initiates a payment to a payee who’s also in Shanghai, the payment may be routed through the Local Clearing System instead of CNAPS. However, the Local Clearing System is not available in all cities.

Paper-Based Payments

China accepts more types of paper-based payments than the United States. Though paper instruments will continue to be used for the future, their use of paper instruments is declining in favor of electronic payments. You should be familiar with the following instruments:

  • Check 支票 can be used to withdraw cash and transfer funds.   
  • Bank Drafts 银行汇票 require the full amount from the company for issuance. Bank drafts can be paid to both corporates and individuals.
  • Commercial drafts are 银行汇票 future-dated negotiable instruments which include a trade financing feature. Commercial drafts are signed and issued by corporates only. The payer unconditionally pays the payee or the bills holder at sight or at a future date (up to 6 months for paper-based drafts and 12 months for electronic drafts). Individuals cannot issue commercial drafts.

Two Types of Commerical Draft 

Bank acceptance draft 银行承兑汇票 Commercial drafts accepted by banks for payments.
Commercial acceptance draft 商业承兑汇票 Commercial drafts are accepted by non-bank companies for payments. They are not used frequently due to the perceived higher risk of non-banks.

Electronic Commercial Draft System 电子商业汇票系统

The Electronic Commercial Draft System (ECDS) creates an electronic network to accept, record and transmit electronic commercial draft data.  Paper commercial draft registration, inquiries and discounting quotes can be processed through ECDS. This increases visibility as well as providing a way to authenticate the drafts, mitigating much of the associated operational and fraud risk.

Card Payments

China uses one predominant card payment network: UnionPay, while the United States multiple card networks such as Visa, MasterCard, American Express, etc.  While cards from non-Chinese networks can be accepted in China, they are primarily used by overseas travelers to China and are not widely accepted compared to UnionPay.

Notable Payment Practices

Electronic Payments Selection

In the United States, it is common practice for electronic payments initiation to be determined by the payment system. For example, ACH may have one payment method and file format, while wire transfer may have a different method and format, etc. Therefore, companies may utilize separate service modules in Online Banking or create and deliver separate transaction data files to their bank service providers to make ACH and Wire payments.

Payment practices that are less tied to specific by payment systems are also available, such as PNC’s Payables Advantage services, and ISO20022 standards are increasingly being adopted.

Electronic payments practices in China are less concerned about whether payments should be made via “HVPS”, “BEPS” or “IBPS”, etc., and instead the type of payment determined more by how large the payment is (high-value vs low-value) and how quickly (urgent vs non-urgent) it should be settled with the beneficiary.

Direct Connectivity and File Transmission

Larger corporates can opt to have direct connectivity with the bank (银企直联), and can choose among several connectivity methods. Mid-sized companies generally would not opt for direct connectivity due to its complexity and technology requirements and are likely to leverage online banking for payment initiation.

Payments can be initiated by file transmission of data containing payment information. Alternatively, some banks may allow a “direct interface” to the bank. In this case, the bank can then receive payment information from the company in real time. The company designates how the payment would be paid based on the amount and the urgency of the payment. 

File formats can differ depending on the company’s ERP system. Therefore, there is not a unified payment format for direct connectivity or file transmission.

Branch Banking and Courier

For companies with small operations in China and minimal payment volume, payments can be made via branch banking or courier in lieu of Online Banking. Processes are available for companies to courier payment instructions and/or credit vouchers 贷记凭证 (a type of paper-based instrument for same-city payment) to the bank, or courier paper-based payment instruments such as checks to the payee. Processes may differ by bank.

This would be equivalent to a small business in the U.S. where the operations are minimal and payments are conducted exclusively through checks or the branch.

Beneficiary Data Requirement:

When remitting payments, there are for 4 data points that must match for a payment to settle to a beneficiary account:

  • Beneficiary bank branch name
  • Beneficiary bank routing number (CNAPS code)
  • Beneficiary name
  • Beneficiary account number

Accurately attaching full beneficiary information to the payments critical for payments in China even for the low-value payment systems such as BEPS and IBPS. This is different from the U.S.-ACH convention, because ACH does not require the name to match and only requires the beneficiary account and ABA to post the transaction per UCC 4A regulations.

Key Payment Similarities

Many parallels exist between the major payment systems in the United States and China. It’s important for global treasurers whose companies operate in both countries to understand the similarities.

  • From an electronic payments standpoint, China’s HVPS is comparable to U.S. Fedwire system for RTGS payments, while BEPS is comparable to U.S. ACH as a low-value/non-urgent net settlement system.
  • Checks are used in both China and U.S. for business to business payments, and both countries have check image clearing systems, though the adoption of electronic check image clearing in China appears to be less widespread compared to the United States based on payment systems volume.
  • The UnionPay card payment network is a mature card payment network in China, comparable to Visa, MasterCard, American Express, etc. in other markets.

Payment System Overview 

Main Payment Systems U.S. China
High Value Payment Systems FedWire (RTGS) HVPS (RTGS)
Low Value Payment System

ACH (Bulk Net Settlement System)

RTP (Real Time Payment)

BEPS (Bulk Real-time Netting, Same-Day Settlement)

IBPS (Real Time Interbank Transfers)

Check Imaging Federal Reserve Check Imaging System (CIS)
Card Network Visa, MasterCard, American Express, etc. UnionPay
Commercial Drafts N/A ECDS


Key Payment Differences

Just as there are many similarities, there are many differences between the payment systems and practices that you should be aware of:

Card Payments are generally used for office supplies, incidental purchases, employee travel and entertainment, etc.  Business to business vendor payments via purchasing cards, which is common in the United States and other countries, is not a market practice in China.

Paper Instruments such as bank drafts, commercial drafts, checks, etc. are used extensively for business to business payments in China. In the United States there is no instrument equivalent to commercial drafts, and checks would be much more common for business to business payments than bank drafts.

Online Banking Payments in China are made through a unique, dedicated payment system called IBPS. In addition to payments, IBPS provides interbank account inquiry functionality for individuals and corporates who have multiple accounts at different banks and would like to view their account information on one online banking platform. IBPS is not available at all banks.

Debit Transactions cannot be initiated by corporates in China directly via online banking or data transmission unlike in the U.S. Instead, they must be done through “entrusted collections,” where banks would first verify that an agreement is in place between the parties, then the funds are collected through bank channels for settlement. Electronic debits are allowed for consumer utility payments otherwise. 

Ready To Help

China’s financial environment has experienced significant changes over the last few years, and we expect the trend to continue. PNC’s Shanghai Representative Office can provide overall guidance and help you understand the implications of conducting business in China. For more information, please contact your PNC Relationship Manager or visit pnc.com/GoChina.