Hong Kong signs agreement with People’s Bank of China to enhance Faster Payment System

Amjad Ali August 3, 2024

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The Hong Kong Monetary Authority (HKMA) has signed an agreement with the Chinese central bank to promote cross-border linkages for the Faster Payment System (FPS), creating a framework for facilitating more commerce and people flows on both sides.

The announcement came after Friday’s meeting between deputy governor of the People’s Bank of China (PBOC) Lu Lei and HKMA’s deputy CEO Howard Lee, where the two exchanged views on deepening financial cooperation between mainland China and Hong Kong.

Enhancements to cross-border payment arrangements to make it easier for Hongkongers to travel, live, work or retire on the mainland have been in the works for some time.

At the end of June, HKMA CEO Eddie Yue Wai-man said in an article that the memorandum of understanding would establish a “cooperative framework” for the linkage, which would provide a “safe, efficient and convenient means for cross-boundary payment and settlement, facilitating economic activities and flows of people between the two places”.

Headquarters of the People’s Bank of China is pictured in Beijing, September 28, 2018. Photo: Reuters

There were no further details on the framework in Friday’s announcement.

The current remittance cap is 80,000 yuan (US$11,015) per day from Hong Kong to the mainland, according to the HKMA. New remittance limits, or quotas, will be decided by China’s State Administration of Foreign Exchange, the HKMA had previously said.

The PBOC and HKMA unveiled six policy enhancements in January to support Hong Kong as China’s global financial hub. The measures also include expanding two cross-border trading schemes, the Bond Connect and the Wealth Management Connect mechanisms, as well as e-CNY pilots in Hong Kong and cross-boundary credit referencing collaboration among banks in Hong Kong and on the mainland.

The logo of HKMA is seen at its offices in Central. Photo: Yik Yeung-man

The FPS, launched in 2018 by HKMA to make cross-bank and e-wallet payments easier, operates 24/7 and supports payments in Hong Kong dollars and renminbi. However, direct payments via FPS in mainland China are still a work in progress.

Starting in May, Hong Kong residents were allowed to use FPS to top up their e-CNY wallets in a citywide roll-out of a digital yuan pilot that aimed to make cross-border retail payments more convenient.

Last December, the HKMA announced an agreement with the Bank of Thailand to allow users of the city’s FPS to make purchases in Thailand, while Thais travelling to Hong Kong could use their local equivalent, PromptPay, at merchants in the city that accepted QR code payments.

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