When it comes to the payments industry, it’s valuable to take a look at global news and trends for a fresh perspective on trade and e-commerce. Here’s what’s happening in outbound payments in the US, China and India.
Cross-border payments firm Earthport will provide expanded ACH capabilities for Bank of America Merrill Lynch. The Chinese government imposed tighter restrictions on outbound payments which could have some negative effects on Chinese investment in the US and abroad, as well as foreign investors receiving dividends and international payments.
CNBC.com reports Chinese foreign investment could be impacted. Chinese acquisitions in the US, Western Europe and Asia totalled $208 billion this year compared to $97 billion in 2015. Chinese foreign exchange controls may prop up the renminbi but dampen foreign investment into China and hinder outbound payments for trade as well as consumer spending online.
In India, demonetization is hitting Indian foreign students and their families hard who often previously paid cash for tuition and expenses abroad. e-commerce payments are impacted as well as 70% of Amazon purchases, for example, were paid in cash COD to delivery drivers. The government hopes people will move to mobile, cardless and other forms of payment.
New ACH Capabilities for Bank of America
Cross-border payments firm Earthport will be helping Bank of America Merrill Lynch expand its ACH capabilities.
Reports Monday (Dec. 12) said Bank of America has signed a multi-year contract with Earthport to integrate its international payments processing capabilities using ACH technology. Bank of America clients using its existing online banking platform, CashPro, will have more options for international ACH payments with Earthport’s integrated offering, the companies explained, including more currencies and more countries supported.
“BofAML is one of the world’s largest payments and cash management banks, and we are delighted to be extending our services to them, bringing real efficiency and transparency to cross-border payments for their clients,” said Earthport CEO Hank Uberoi. “The innovation that BofAML is bringing to payments is exciting and we are thrilled to be playing a part in it.” Via pymnts.com
China’s tighter capital controls impeding Western firms’ payments, dividends: lobbies
Tighter rules in China on outbound capital flows have raised barriers for European and U.S. companies to get money out of the country, two prominent business lobbies said on Wednesday, with one saying dividend payments had been affected.
Chinese regulators have tightened restrictions on foreign exchange transactions and outflows in recent weeks amid growing concern that outflows are adding to pressure on the weakening yuan currency.
The foreign exchange regulator gave window guidance to banks last week to “control the capital outflow from China” by tightening approval requirements on cross-border transfers from capital accounts and dividend payments, the European Union Chamber of Commerce in China said in a statement. Via reuters.com
Has China put the brake on M&A?
If you’ve listened to Germany’s economy minister and deputy chancellor Sigmar Gabriel recently, you might be under the impression that China is about to take over Europe and the industrialized world.
However, that’s all changed. This month Beijing announced new capital controls measures, including curbs on international renminbi payments and gold imports and, crucially, restrictions on outbound mergers and acquisitions.
The volume and number of Chinese acquisitions in the U.S., European Union and Japan has accelerated in recent years. In the first three-quarters of 2016, Chinese acquisitions in the U.S., Western Europe and developed Asia totalled $208 billion. This compares to $97 billion in the same period in 2015, $44 billion in 2014 and $30 billion in 2013. Via cnbc.com
Reported Foreign Exchange Restrictions in China Affect Outward Remittances
In late November and early December 2016, Chinese and international media reported on enhanced enforcement of outbound investment and foreign exchange controls by Chinese authorities trying to check the volume of overseas acquisitions and halt the slide of the exchange rate of the Renminbi against the U.S. dollar. These actions reportedly target outbound direct investment (“ODI”) transactions (including offshore investments through overseas subsidiaries) and cross-border loans to affiliates by Chinese corporations as well as payment of dividends by Chinese companies to foreign shareholders. Various business sources have confirmed that, at least in some cases, payments and transactions have been negatively affected.
There is little reliable information about the substantive and procedural content of the new restrictions. No regulation or notice has been published by government authorities, nor have government officials publicly confirmed the existence of any of the reported documents and actions. PRC media have posted purported extracts from official documents, but these extracts have been taken down from the Internet, presumably upon government request. Via lexology.com
India: short-term effects of rupee demonetization could hit outbound market
Overseas higher education may experience a disproportionate effect compared to other industries, as it’s seen as luxury, noted Yathapu. However, the international education sector is not the only industry experiencing the effect of demonetization.
“It’s going to impact everything,” said Sukhwani, nodding to the leisure and travel industries in particular. He said that 70% of Amazon orders in India are paid in cash to the driver on delivery, instead of by credit or debit card online, illustrating the extent to which India operates as a cash economy.
A large proportion of the population do not hold a bank account, and those who earn money on a daily wage and pay for their food every day will also be affected, said Singh. Via thepienews.com
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