Where is it Legal to Make RMB Payments?

If you’re from a region where RMB is the official currency, or you’re doing business that involves RMB transactions, it’s important to know where it’s legal to make RMB payments.

In this blog post, we’ll go over the specifics of the offshore RMB market, where you can make accommodations for RMB transactions outside of China, and the best way to make RMB payments from abroad.

An Intro to the RMB

Renminbi (RMB) is known as the people’s currency in its parent country, The People’s Republic of China.

The currency was introduced by the People’s Bank of China in 1948 and was internationalized in the late 2000s.

RMB is the official currency of China, however, the currency is known by another name: the Yuan.

The Yuan (CNY) is used as a unit of account by China’s economic and financial systems. 

This can be quite perplexing for those who are new to the currency.

Some good analogies to explain the difference between Renminbi and Yuan include the U.S. Federal Reserve Note vs. the U.S. Dollar, or the British Pound Sterling vs. the British Pound. 

Thanks to the loosening of the Chinese government’s control of the RMB and the Chinese economy as a whole, the RMB has become a commonly accepted currency for international business. 

In 2016, the RMB was named as one of the top five most used currencies in the world, among the U.S. dollar, the Euro, the Yen, and the British Pound.

The RMB is now part of the IMF’s Special Drawing Rights Basket, which is an international reserve asset that serves as a supplement to the reserves of member countries.

International transactions involving RMB are referred to as RMB cross-border settlements.

Before the internationalization of RMB in 2009, these transactions were carried out solely through USD.

Currently, one unit of RMB, or Chinese Yuan, is worth $0.15 USD. 

Where is it Legal to Make RMB Payments?

In China, RMB is the accepted currency throughout the country.

This includes the city of Hong Kong.

If you’re in any part of China, it is perfectly acceptable and legal to make payments in RMB. 

This matter becomes more complicated when you’re out of the country.

If you’re doing business with Chinese suppliers from abroad, or a Chinese national making RMB payments from abroad, the rules are different. 

Put simply, you can make RMB payments in any country with banks that offer RMB services.

Every developed country has branches of these banks, but how common these branches depend on how close that country’s business ties to China are.

In 2016, RMB ranked as the 5th most active currency for global payments.

A rule of thumb to go by here is if your country has RMB-friendly banks, you can legally make RMB payments there.

If you are earning money in a country foreign from China and you need to make RMB payments, RMB-friendly banks will be able to accommodate you. 

According to SWIFT, over 100 countries now allow the use of RMB for payments to China and Hong Kong.

RMB can be exchanged and used by customers of many different Chinese and international banks.

Here is a list of banks that offer RMB services:

HSBC

HSBC Holdings is a well-known multinational bank for users of RMB.

With robust digital banking services and branches all over the globe, HSBC has been selected in 2020 as the Asiamoney Number 1 Best Overall Bank for RMB Products and Services. 

HSBC has won this award for nine consecutive years. HSBC customers with RMB accounts can trade RMB securities, create RMB current and savings accounts, issue checks, and enjoy several benefits.

These benefits include bonus interest on accounts with a minimum balance, 24-7 access to your account, and no maximum balance on accounts.

Bank of America

The Bank of America offers many foreign exchange services and can accommodate RMB payments through multi-currency accounts.

As one of the largest banks in North America, the Bank of America is a good choice for American businesses doing business in China. 

The Bank of China Hong Kong (BOCHK)

The Bank of China (Hong Kong) is one of the largest banking groups based in Hong Kong.

The BOCHK has been the largest RMB clearing bank since 2004. 

With the BOCHK, you can open RMB settlement accounts and withdraw RMB funds.

You can also collect and distribute RMB banknotes, and the bank will provide exchange services.

The Industrial and Commercial Bank of China (ICBC)

Founded in 1984, the ICBC is now one of the top one thousand largest global banks.

In 2017 and 2018, the bank ranked as the largest bank in the world regarding total assets.

With branches around the world, the ICBC is an ideal institution for businesses to conduct RMB transactions.

The China Construction Bank Corporation (CCB)

As a member of the “Big Four” Chinese banks, and ranked as the 2nd largest bank in the world in 2015, the CCB is one of your best options for carrying out RMB transactions. 

The CCB has branches all over the world, including major cities like New York City, Seoul, Tokyo, Melbourne, Luxembourg, Barcelona, Frankfurt, and a few more prominent international business cities.

These are just the largest banks that offer RMB services.

There are many more banks out there to choose from. 

Conclusion

In summary, RMB is the ever-growing official currency of the People’s Republic of China.

With the swift and broad internationalization of the currency, the regions in which you cannot perform legal RMB transactions are largely outnumbered by the region in which you can.

As long as you can find an RMB-friendly bank, you should be able to carry out your RMB transactions with no issues.

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