China 'may allow foreign currency online transactions'

BEIJING (REUTERS) - China may allow 17 online payment services companies, including Alibaba Group's Alipay and Tencent Holding's Tenpay, to trial foreign currency transactions as part of a pilot programme.

A report in the official Shanghai Securities News quoted on Wednesday an unidentified source as saying that the State Administration of Foreign Exchange had given verbal permission for the trials, which may pave the way for these companies to handle transactions by Chinese shoppers who buy goods and services from foreign online retailers using local currency.

China this year is expected to leapfrog the United States to become the world's largest online marketplace by customer spending, and is forecast to be worth 3.3 trillion yuan (S$677 billion) by 2015, according to consultants Bain & Company, China's e-commerce market has grown at an average rate of 71 per cent from 2009 to last year compared to 13 per cent in the US, the Bain report added.

The volume of third-party online payments in China reached 1.1 trillion yuan in the second quarter of the year, a 28 per cent year-on-year increase, according to Beijing-based research firm iResearch. Alipay accounted for almost half of market, while Tenpay accounted for 20 per cent.