Disrupting Cross Border B2B Payments in China

China continues to expand by expanding its presence into various industries across the
globe. There is a growing pressure on China to tackle the B2B cross-border payment issue
which has been a major problem for its current system. The cross border B2B payment
problem is a major issue for smaller and medium-sized companies that have difficulty
accessing the countries banking system because of the regulations in China. This B2B
payment bottleneck has an impact on companies that deal with SMEs in China and abroad.

Monopoly of Chinese Bank B2B Payout Monopoly

There are three methods to make B2B payments in China. The most popular is bank transfer
(also called telegraphic transactions) is the most well-known. Telegraphic transfers are the
most popular method to make cross-border payments, including to Chinese companies
based within mainland China. This option can be difficult for SMEs to gain access to because
they may lack the documents, capital, and other items necessary to allow bank transfers
inside of China and payments made into China as well as it is also an extremely complicated
process to make an electronic transfer.

The transfer of funds from banks tends to take at minimum five business days after the day
the transaction was made. To have funds electronically wired to accounts of the beneficiary,
the company might need to send documents and employees to China.

While SMEs and even new companies may be able to satisfy all the requirements for
sending and receiving money via the telegraphic transfer, it's not enough to ensure that
Chinese banks severely limit access to bank transfers for small financial institutions as well
as non-banking companies. There are currently 4500 banks in China that are authorized to
accept and send bank transfers.

While that number is quite huge, it's not enough to satisfy the demands of the market. The
current system isn't enough to meet the requirements of China's expanding market. This is
due to the many transactions that cross over the border between China and mainland China.

Electronic payment
The use of electronic payment has increased in China. In 2018 92% of urban users and 47%
of rural consumers in China utilized their smartphones to purchase goods. The primary
service providers are WeChat Pay and Alipay. They are extremely simple. The buyer needs
to scan the QR code of the seller in order to pay the amount.

The applications permit merchants to sell their goods to Chinese tourists from countries other
that China. Electronic payment can boost the chance of Chinese tourists purchasing goods.
The amount they spend can be up to 25% of the sales of a brand in one year. Merchants
must register with the Chinese payment system in order to see their sales processed through
it. This could be a challenge for small-sized businesses with only a few contacts with China
and/or do not participate in any business.

Cash on Delivery (COD)

The most commonly used method of payment for Chinese customers is cash-on-delivery.
Since it is available to anyone who does not have having an online bank account or who
don't have technical expertise, it is able to surpass electronic payments and bank transfers.
COD is also preferred as customers can test the quality of goods prior to buying them. In
exchange for a small amount the non-banking service provider will provide this service and
then return the rest of the amount to the seller. The system works for everyone. Dangdang is
Amazon and JD.com are the two largest third-party payment services that are not bank-
based providers.

The drawback of this method is that a third party is required to pay for the goods and handle
the payment. The third party that is involved in the transaction could prolong the time
required by the seller to collect payments from customers. This could also lower the profits
generated from these payments because of fees for third party transaction or service fees. It
is beneficial for both the customer and the seller to exclude the third party from the
transaction. This can speed up the delivery of goods or services, and also the transfer of
payments from customers to sellers.

SMEs Drive Financial Sector Innovation

In 2015, more than 60% of foreign trade was managed by mainland Chinese SME. They are
the major factor behind the rapid growth in the field of fintech and e-commerce solutions to
international e-commerce concerns. At present, SMEs in mainland China are the driving
force behind disruptions in China's financial system and the radical change to cross-border
payments in and out of China. SMEs are also able to serve niche markets that bigger
established businesses can't, which increases the pressure on China's banking system to
simplify and make commercial transactions more efficient, which will allow smaller, less
established businesses to expand and cater to China's expanding commercial needs.

As the Belt Road Initiative gain greater momentum and big companies need to be focused on
meeting the stringent requirements of the Chinese government to get its company up and
running, small- and mid-sized businesses are likely to be the ones serving the needs of the
economically less wealthy and powerful. Thus, they need banking products that are
accessible for them as well as the communities who they are serving.

B2C and Fintech

In the longer term Aleta Planet's solution for the issue of bottlenecks between countries and
its service for payment delivery are faster than traditional bank transfers and more simple,
easy transactions are helping local industries grow. These developments are beneficial to the
financial technology and SME industries. These technological advances are increasing
international B2C commerce spending. This is leading to the development of Fintech
solutions for B2C transactions.

It is vital to ensure that the Chinese border does not impede the flow of money or goods as
the Chinese economy shifts to a more consumer-oriented. AP-1 Business platforms give
Chinese suppliers greater confidence in receiving their payments on time.

Fintech to save the day

Fintech companies have realised the need for better services. Customers, such as SMEs
and e-commerce sellers and also startups in the field, are looking for the financial and other
services that will improve their lives. Fintech companies integrate technology, finance, and
creativity to provide innovative solutions that assist SMEs overcome their limitations and
perform business more efficiently.
The goal of the firms is to make cross border B2B payments more accessible more
manageable more manageable, less troublesome and a preferred method to do business in
China. Aleta Planet is one of these firms that is leading the charge. Aleta Planet designed a
system that is based on the UnionPay system to facilitate seamless payments from and to
China. It also makes it possible for foreigners to pay regularly.

AP-1 Business

AP-1 Business is a virtual business account that is accessible to business entities outside of
China. Business AP-1 offers the payment in T+1. This is the greatest characteristic of AP-1
business. The banks usually allow bank transfers to be made in the T+5 range or higher.
This rapid access and certainty of payments is because AP-1 Business is a part of the
UnionPay network. As such, the money is transferred from an offshore UnionPay account
(AP-1 Business) to an onshore UnionPay account owned by the supplier in China.

There are still other notable benefits to using AP-1 Business. Foreign businesses doing
business with Chinese companies will discover all of the AP-1 Business benefits attractive.

Key Features

All-in-One Service

AP-1 Business offers a one-stop service that lets customers send, receive , and process the
remittances. It is able to be utilized by non-natives and there are no limitations on owners
and shareholders from outside the country for business accounts created with the AP-1
Business. In addition, companies are able to open business accounts through the AP-1
Business service without having a company director's physical presence in Singapore.

Since it's a part of as a part of the UnionPay platform, AP-1 Business has the capability to
provide superior customer support and all-in-one service to its clients. All Chinese banks and
financial institutions can use the UnionPay platform. AP-1 Business has eliminated the
middleman from the equation through this platform.

Instead of banks having to transfer funds through intermediary banks like banks, money
transferred with the AP-1 Business service is credited directly to the beneficiary's bank
account. AP-1 Business lets users withdraw money from ATMs around the world. The
system is backed by Visa and Huawei Pay. The ATM cash withdrawal facility will begin
operation in the second quarter of 2021.

Attractive rates of foreign exchange

Another attractive feature of AP-1 is the forex (FX), rates. AP-1 Business offers the most
direct rates for FX (SGD to RMB) for China via the UnionPay network. The rates for FX are
extremely attractive considering that some of the payment platforms offer higher rates on FX
exchanges but charge a fee to transfer money across the borders. A.P.-1 Business ensures
that customers receive the best FX rates when international payments are required.

No Minimum Balances for Accounts or deposits

In contrast to many business accounts, AP-1 Business does NOT require customers to keep
a minimum amount of balance, or make a an annual minimum deposit to their accounts. The
absence of a minimum balance or deposit has enabled some SMEs to keep their business
operations going through the COVID-19 outbreak and slowly recover. This is why AP-1
Business aims to provide modern day finance solutions that can't be solved by the current
banking industry.

AP-1 Business customers can make cross-border payments to China using the AP-1
Business Virtual Card. The card operates in the same way as the prepaid debit card, and the
purchase and payment are taken directly from your account's account funds.

Utilizing the AP-1 Business Card allows customers to skip the tedious and long-winded
process of clearing transactions in the first place, providing documentation, or other
procedures required by banks to make transactions across borders via bank transfer. It is
ultimately an excellent win-win for SMEs involved in e-commerce and cross border B2B
payments.

Aleta Planet's Roadmap for the Future

Aleta Planet, along with other fintech firms , has experienced huge growth. It is continuing to
grow as China's economy grows and the volume of transactions through ecommerce
increases. While the COVID-19 epidemic weakened the Chinese economy, China has been
the only country to not only return to normal levels, but also to experience economic
expansion.
Conclusion

In short the three systems utilized to manage commercial transactions in mainland China do
not have the flexibility required and cannot be easily accessed by foreigners and people
outside of China. The AP-1 Business system from Aleta Planet solves this problem by
providing businesses in offshore countries with an easy access to Chinese products, services
and payments. The simple, seamless access is a catalyst for the growth of Chinese SMEs, a
mainland Chinese consumer economy, and the growth of more technologically advanced
payment systems that allow financial transactions for B2Bs and B2Cs. AP-1 is the leader in
this space providing buyers and sellers with the tools to bypass the bottlenecks that hinder
commercial transactions in China and also to help them exercise and develop their
businesses.