PayPal Inc. this year will set up its first foreign currency settlement platform in Chongqing, China, along with five international e-commerce centers under an agreement the unit of eBay Inc. signed with the Chongqing Municipal Government on Dec. 28.
“Chongqing has plans become the financial-services center of western China, and we are happy to support their goals with our partnership and commitment to developing west China,” a PayPal spokesperson in Singapore tells PaymentsSource.
The goal of the program is to enable Chinese small and midsize enterprises to conduct cross-border trade more conveniently via e-commerce, he says.
Many such Chinese enterprises are facing hurdles in doing business with foreign companies. For example, Chinese regulations allow small-business owners to convert only up to US$50,000 into yuan each year.
According to PayPal, the foreign currency settlement platform it would build in collaboration with the municipal government would help small merchants get faster access to an export license, which would get them a higher conversion ceiling.
“Working with the Chongqing government, we are going to find a way to reduce this friction point for Chinese merchants,” the spokesperson says, noting discussions thus far have focused on the processes necessary to achieve that goal.
The Chongqing government will be responsible for getting the necessary approvals for the transaction-settlement platform, which will be supervised by the Safe Administration of Foreign Exchange.
Chongqing Mayor Huang Qifan said during a press conference that he expects the scale of foreign-currency settlement could reach US$30billion by 2015.