From Cross-Border E-Commerce to New Trade Formats: What the New FX Rules Mean for Payment Institutions

The scope of foreign exchange business open to payment institutions is set to expand.

A draft notice on further improving current account foreign exchange management, drawn up by the State Administration of Foreign Exchange (SAFE), specifies that the FX business scope of payment institutions will be extended from cross-border e-commerce to cross-border transactions in new trade formats such as market procurement trade and comprehensive foreign trade services.

The draft has been released for public consultation, with feedback due by December 1, 2026.

"The policy carries multiple positive values," said Wang Pengbo, chief analyst at Botong Consulting. On one hand, it opens up room for growth for cross-border payment institutions; on the other, it provides a compliant settlement channel for fragmented transactions involving small and micro merchants and individual foreign traders, pushing FX facilitation down to the "capillaries" of foreign trade.

Expanding the FX business scope of payment institutions

Under the draft, payment institutions providing current account electronic payment services to entities in new trade formats must meet requirements on customer identification, electronic collection of transaction information and authenticity review, and must complete current account receipt and payment registration with the local SAFE branch.

Su Xiaorui, a senior researcher at Suxi Zhiyan, said the core participants in market procurement trade and comprehensive foreign trade services are small and micro merchants and individuals, whose transactions are typically small in value and high in frequency, making full coverage by traditional banks difficult. By widening payment institutions' scope from cross-border e-commerce alone to a broader set of new trade formats, the draft can push FX facilitation down to the "capillaries" of foreign trade and form an effective complement to the traditional banking system.

Yuan Fang, general manager of marketing for Payoneer's Greater China region, said that as China's foreign trade formats become more diverse and models such as cross-border e-commerce logistics and marketing services increasingly converge, corporates' cross-border collection and payment needs have become more varied. The draft helps cross-border financial services better match real trade scenarios and offers foreign trade entities of different types and sizes more diversified and efficient settlement options. At the same time, its explicit requirements on customer identification, electronic transaction information collection and authenticity review reflect a policy orientation that balances trade facilitation with risk management.

Wang Pengbo believes the regulatory approach is oriented toward capability-based access rather than a relaxation of review standards. Institutions conducting the relevant current account payment business must implement customer identification, electronic transaction information collection and authenticity review, complete receipt and payment registration with the local SAFE branch, and possess data verification capabilities covering orders, customs declarations and logistics before they can take on the new business.

Wang Pengbo advised qualified institutions to engage proactively with local SAFE branches to understand registration materials and procedures in advance. On customer acquisition, they should avoid blindly building teams and should instead focus on market procurement pilot zones, comprehensive foreign trade pilot areas and leading comprehensive foreign trade service platforms, leveraging partners' merchant resources to scale up. Product lines can also be diversified along the foreign trade service chain, adding value-added services such as fund pooling and tax rebate coordination to improve customer stickiness and revenue.

Opening up growth space for cross-border payments

The draft explicitly broadens the scope of new trade format FX business for payment institutions. In Su Xiaorui's view, this opens incremental market space, allowing payment institutions to serve market procurement and comprehensive foreign trade service entities, with a substantive expansion of their licensed business scope. Payment institutions are currently competitive on comprehensive fee rates for small and medium-sized clients, and leading institutions with mature compliance and risk control systems that can quickly connect to new business scenarios are likely to seize the initiative.

"This is clearly a direct benefit for institutions that already handle cross-border e-commerce collection and settlement and hold cross-border FX payment licences. Their target clients expand from platform sellers to market procurement operators and small and medium-sized foreign trade entities within the comprehensive service system, so the incremental space is clear. But it should also be recognised that banks retain traditional advantages in comprehensive foreign trade service settlement and netting settlement; payment institutions mainly take on fragmented transactions that banks do not cover, some of which previously ran through grey channels. There is no blank space in this market," Wang Pengbo said.

Yuan Fang believes more cross-border transaction scenarios mean greater market opportunities for cross-border payment institutions, but also place higher demands on their overall capabilities. Market procurement trade and comprehensive foreign trade services typically involve more diverse counterparties, more complex transaction models and fund flows, and impose higher requirements on speed, management, security and compliance. Payment institutions therefore need not only efficient global collection, payment and treasury capabilities, but also robust systems for customer identification, transaction information collection, authenticity review and risk management. In other words, future competition may hinge not simply on payment efficiency and cost but on comprehensive financial infrastructure capabilities spanning compliance, risk control and service delivery across different global trade scenarios.

Facing this policy opportunity, Su Xiaorui suggested that payment institutions take licensed operation as the bottom line, strengthen merchant review and anti-money laundering compliance to build a solid compliance foundation, and extend their product and service matrix from payments to integrated scenario services. Using payments as the entry point, they could layer on value-added services such as FX hedging and supply chain financing around core links like tax rebates and logistics in market procurement and comprehensive foreign trade services, deepening their position in vertical foreign trade scenarios.

Yuan Fang pointed out that cross-border payment institutions should strengthen capabilities in three areas: first, continuously improving compliance and risk control systems while expanding service scenarios, safeguarding transaction authenticity, fund security and data security; second, continuing to build global financial infrastructure and strengthening coordination between global networks and local compliance capabilities; and third, enhancing the efficiency of cross-border fund management through product and technological innovation tailored to different trade scenarios.