But who wants to pay with RMB? Everyone buying China's e-Commerce!
Chinese FinTech firms prove "faster and cheaper" always wins.
In a stunning development, the Chinese RMB surpassed the US Dollar in cross-border payments within the non-banking sector. And wait for it……it was all brought to you by fintechs!
So, let’s be clear from the start: This is not the death, dethroning, or toppling of the USD. What it shows is that people will pay with whatever is “faster and cheaper” and that cross-border e-commerce is massive.
In the e-commerce or SME cross-border trade world the fastest way to pay is no longer your bank but one of many new fintech platforms.
That is why this statistic is for “non-banks.” In practical terms, this means that when people buy, they send RMB to China, not USD. In most cases, buyers may not even know they are buying in RMB as everything happens behind the scenes.
Why sell in RMB? Simple: Chinese-based e-commerce sites will quote a better price in RMB than foreign currency as they don’t take foreign exchange risk.
China’s major international e-commerce payments players
👉TAKEAWAYS
🔹 China’s cross-border e-commerce trade rose 9.6% year on year to 577.6 billion yuan (about 81.3 billion U.S. dollars) in Q1 2024.
🔹 The rise in e-commerce was fueled by “Silk Road” e-commerce partner countries such as Hungary, the United Arab Emirates, Cambodia and Brazil.
🔹 E-commerce isn’t using banks for transfers but instead relies on the platform, technology service providers, FinTech companies, payment gateways, card networks, payment wallet apps. Everything BUT banks.
🔹 You are witnessing China’s fintechs going global following the Alipay and WeChat Pay revolution.
🔹 Primary players are Alipay+, WeChat Pay, Alibaba, Union Pay, LianLian Pay and ping-pong. Remember that these fintechs now all accept Visa, Mastercard and others.
Major Chinese Payment Fintechs that are changing international payments.
👊STRAIGHT TALK👊
Two important macro-trends are coming together in this article:
The explosion of China’s e-commerce market globally particularly in what the report calls “Silk Road” countries, but I would add Belt and Road Initiative countries.
The migration of Chinese payment fintechs out of China and into the global stage. The best example is Alipay+, which I’ve written about frequently.
The last time I visited my Italian cousins, we chatted about e-commerce, and I was shocked to find them buying from AliExpress, the international version of Alibaba.
If ever there was an example of China’s e-commerce success, this would be it, as my cousins are hardly e-commerce experts.
The US’s love of Shein and Temu show just how powerful China’s e-commerce companies are and they’re going global, particularly in BRI nations.
In my book Cashless, I wrote that the digital yuan would be great for e-commerce, and the increased use of RMB in e-commerce is proving me right.
So, who wants to pay in RMB? Frankly, no one cares what they pay in.
In most cases, the buyers more than likely simply see a price in local currency and have no clue where the foreign exchange transaction happens or who carries the payments.
Now, is this de-dollarization? It most definitely is and it should challenge how you think of it.
This isn’t death of the dollar but more like an annoying slow leak in a car tire.
It’s something you can ignore……until you can’t.
What do you think?
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