China is a global pioneer in mobile-first and cashless payments, home to the world’s largest digital walletsDigital Wallets digital-wallets Applications or platforms (like Apple Pay, Google Pay) that store payment card data securely and allow users to pay digitally. and an ecosystem that leapfrogged traditional card infrastructure. From Alipay and WeChat Pay dominating consumer payments to UnionPay shaping domestic card schemes, and from capital account controls to RMB internationalization via CNH and CIPS, China’s payments ecosystem is uniquely state-controlled yet commercially innovative.
We unpack the entire stack—from walletsWallets wallets See Digital Wallets., bank rails, schemes, and offshore CNH systems to business use cases and regulatory frameworks.
🛍️ 1. Layers of China’s Payment System
This section outlines the foundational structure of payments in China. Like an onion, it has layers—from user-facing wallets to state-controlled settlementSettlement settlement The process of transferring funds from the issuer to the acquirer. systems. The consumer layer includes super apps like Alipay and WeChat Pay. The middle layer includes bank rails (like CNAPS for domestic clearingClearing clearing The exchange of financial information and instructions between acquirers and issuers to facilitate settlement.) and card schemes like UnionPay. Beneath it lies infrastructure for cross-border flows, including CIPS, China’s alternative to SWIFT.
| Layer | Components / Players | Notes |
|---|---|---|
| Consumer Wallets | Alipay, WeChat Pay, UnionPay QuickPass | Mobile-first, QR code-powered, super app integrations |
| Bank Rail | CNAPS, IBPS (PBOC), NetsUnion Clearing Corp, UnionPay | Clearinghouse and card acquiring infrastructure |
| Card Schemes | UnionPay, Visa, Mastercard, JCB | UnionPay holds dominant market share; foreign schemes restricted |
| Mobile Payment Infra | PBOC QR Code Standard, NFC (minor usage) | QR is standard—universal across all retailers |
| Cross-Border Rail | CIPS, SWIFT, Offshore CNAPS, HKFPS | Enables RMB (CNH) flows for trade |
| Offshore CNH Infrastructure | HKMA, ICBC Singapore, Bank of China HK | CNH clearing banks support RMB usage outside mainland |
| Settlement & FX Systems | CCDC, CFETS, SHCH | For bond, FX, and RMB settlement |
| Crypto/CBDC | e-CNY Pilot | Crypto banned; CBDC in pilot phase, issued by PBOC |
💳 2. Wallets and Payment Apps
Alipay and WeChat Pay control over 90% of mobile payments in China. They are not just wallets but ecosystems—offering financial services, insurance, investments, and more. UnionPay’s QuickPass is a bank-centric wallet trying to catch up.
| Wallet | Parent Company | Use Cases | MerchantMerchant merchant An individual or business that accepts payments in exchange for goods or services. Types | Notes |
| Alipay | Ant Group (Alibaba) | eCommerceeCommerce ecommerce Commercial transactions conducted electronically on the internet. Includes digital payments, shopping carts, and fraud prevention., utilities, transit, P2P | All—from street vendors to Tmall | Super app: loans, wealth, insurance, travel |
| WeChat Pay | Tencent | Social gifting, gaming, subscriptions | Embedded in WeChat app | Used for everything from chats to buying coffee |
| UnionPay QuickPass | UnionPay | POS, transport, retail | Bank-linked wallet | Uses UnionPay cards or NFC/QR for mobile payments |
🏦 3. Bank & Card Infrastructure
China’s state-owned banks (ICBC, BOC, etc.) are the primary issuers of UnionPay cards and serve as major acquirers. The card scheme landscape is dominated by UnionPay, a national scheme, unlike other countries where VisaVisa visa A leading global payment technology company connecting consumers, businesses, and banks./MastercardMasterCard mastercard A global payments network enabling electronic transactions between banks, merchants, and cardholders. lead. Settlement and clearing are controlled by PBOC or government-linked institutions.
| Category | Key Players | Notes |
| State-Owned Banks | ICBC, Bank of China, Agricultural Bank of China | Dominate issuance, acquiring, and cross-border RMB flows |
| Clearing Systems | CNAPS, IBPS, NetsUnion, UnionPay | CNAPS = RTGS, IBPS = Instant Pay; NetsUnion for non-bank PSPs |
| Card Scheme | UnionPay, Visa, Mastercard | UnionPay has near monopoly on domestic cards |
💰 4. CNY vs CNH: Currency Structure & Capital Controls
China operates with a dual currency system:
- CNY (onshore RMB) is used domestically and is strictly controlled.
- CNH (offshore RMB) is used for global trade, mostly out of Hong Kong, Singapore, and London.
Capital account controls restrict free flow of RMB out of the country, helping China manage currency stability.
| Feature | CNY (Onshore RMB) | CNH (Offshore RMB) |
| Use | Mainland domestic use only | Hong Kong, Singapore, London, Luxembourg |
| Convertibility | Heavily regulated by SAFE | Relatively open; still monitored |
| Infrastructure | CNAPS, CFETS, SHCH | CIPS, Offshore CNAPS |
| FX Control | Strict outbound/inbound rules | FX risk hedged via NDFs or offshore hedging |
| Business Use Cases | Domestic trade, wages, P2P | B2B invoicing, eCommerce payouts, remittances |
Deep Dive on CNY and CNH:
CNY and CNH are two versions of the Chinese Yuan. While they are technically the same currency, they function under different regulatory environments:
- CNY (Chinese Yuan Renminbi) is used within mainland China. It is not freely convertible, and flows in and out of the country are tightly controlled by SAFE (State Administration of Foreign Exchange). Payment systems such as CNAPS (China’s RTGS) and CFETS (foreign exchange matching) support this market.
- CNH is the offshore version of RMB, created in Hong Kong in 2010. It is traded internationally, especially for settlements in trade, cross-border eCommerce, and foreign direct investment. CNH is governed by a more liberalized regime, although flows back into China are still scrutinized.
The emergence of CIPS (China’s answer to SWIFT) is part of the CNH strategy. It allows cross-border RMB flows without touching SWIFT infrastructure and aligns with China’s goal to internationalize the RMB.
🌐 5. Cross-Border & Business Use Cases
This section illustrates real-world flows.
- How foreign brands like Nike or Apple sell in China via local PSPs.
- How Chinese merchants on Amazon or AliExpress get paid in CNH.
- How B2B traders use CIPS for international RMB invoices.
- And how e-CNY pilots are being trialed in specific cities and sectors.
| Use Case | Flow Type | Players / Solution | Notes |
| Foreign Brands Selling in China | Inbound via Wallets (CNY) | Alipay, WeChat Pay, UnionPay, Adyen China, Airwallex | Requires domestic PSP, JV, or local partner for RMB collection |
| Chinese Exporters Selling Overseas | CNH payouts or FX conversion | LianLian, PingPong, Payoneer, WorldFirst, Airwallex | CNH-based collections in HK, FX converted or held in wallets |
| B2B RMB Trade & Invoicing | CIPS or CNAPS offshore | ICBC HK, Bank of China SG | Supports Belt & Road initiative, RMB-denominated invoices |
| e-CNY Use (CBDC) | Retail pilots | POS terminals, public transit, municipal subsidies | Pilots in Suzhou, Shenzhen, Chengdu |
🧐 6. Why It Works: China’s Strategic Playbook
China’s payments success isn’t just about tech—it’s deliberate policy + infrastructure. By tightly controlling the payment rails, enabling open APIs for wallets, and deploying universal QR codes, China achieved interoperability and financial inclusion at scale.
| Key Factor | Strategic Purpose |
| State-Controlled Rail | Prevents systemic risks and ensures uniform tech standards |
| Wallet-Centric Model | Drives consumer loyalty, data captureCapture capture The act of finalizing an authorized payment. Funds are transferred from the cardholder’s account to the merchant., and app-based engagement |
| Capital Account Controls | Avoids large capital flight and maintains FX reserves |
| CIPS Globalization | Aims to replace SWIFT for RMB trade flows |
| QR Standardization | Ensures nationwide merchant adoption, even in rural areas |
🏢 7. Key Infrastructure Players
From wallets (Alipay, WeChat Pay) to PSPs (LianLian, PingPong) and infrastructure enablers (CIPS, CFETS), this is a quick directory of who’s who in China’s payments landscape.
| Company | Role | Website |
| Alipay | Wallet, PSP, super app | alipay.com |
| WeChat Pay | Wallet embedded in social app | pay.weixin.qq.com |
| UnionPay | Card network, QR rails, issuing | unionpayintl.com |
| Airwallex | Cross-border payments and FX for SMEs | airwallex.com |
| LianLian Pay | PSP for Chinese sellers on Amazon | lianlianpay.com |
| PingPong | eCommerce payouts | pingpongx.com |
| CIPS | RMB clearing and settlement network | cips.com.cn |
| CFETS | FX trading and RMB rate fixing | chinamoney.com.cn |
🚀 8. Trends to Watch
China is shaping the future of money through e-CNY, cross-border RMB trade expansion, and CIPS global outreach. Unlike most Western markets, China is doubling down on programmable money (CBDC) and decoupling from SWIFT.
| Trend | Why It Matters |
| e-CNY Rollout | Enables programmable money; may challenge wallets in future |
| RMB Trade Expansion | ASEAN, Africa, Russia are increasingly settling in RMB |
| SWIFT Decoupling via CIPS | Protects from geopolitical risk; increases use of CIPS over SWIFT |
| Embedded Finance Growth | Chinese tech firms embedding payments deeper into social, gaming, shopping |
📌 Final Thoughts
China’s payment system is not just a domestic success story—it is a blueprint for mobile-first economies, central bank innovation, and cross-border strategy using national currency. With capital controls, state-backed rail, and commercial tech innovation, China has built a closed-loop yet outward-facing payment model.
For businesses, understanding China means navigating a hybrid world where Alipay and CIPS may be more critical than Visa and SWIFT.
Stay tuned to PaymentsPedia for deeper dives into the Asia-Pacific payments landscape, digital wallet ecosystems, and the future of cross-border money movement.
Vibhu Arya is a fintechFintech fintech
Short for financial technology, refers to tech-enabled innovation in financial services. and payments expert with 15+ years of experience simplifying how money moves across digital and retail ecosystems. He’s led strategy and partnerships at Citibank, Adyen, and IKEA, and helped scale fintech startups (Snapdeal, iPaylinks) to $1B+ valuations. Vibhu’s expertise spans cards, crypto, cross-border, and real-time payments. He is the founder of PaymentsPedia.com, where he writes about the future of payments.
📧 vibhu@paymentspedia.com | LinkedIn