Frequently asked questions Why do I need to provide the Purpose of Payment Code when I make cross-border outward payments in RMB? This is a new requirement announced by the People’s Bank of China (PBOC). RMB cross-border payments to China or cleared through Hong Kong are mandated to provide the Purpose of Payment code in order to indicate the type of business associated with. If the purpose code has not been provided, the RMB payment may be rejected, delayed, or incur additional charges. Why are other banks not requesting the purpose of payment code when making cross-border RMB payments. As the leading RMB bank, HSBC adopts the updated China National Advanced Payment System (CNAPS2) standard ahead of other banks and implements respective enhancements to assist you in becoming familiar with the new requirement on cross-border RMB remittances. Why is HSBC introducing a dedicated set of purpose of payment codes? PBOC and the RMB Clearing Bank in Hong Kong have introduced two separate sets of purpose of payment codes. To ease the declaration process, HSBC has untied both sets of code into one. You do not need to worry about the difference on format and applicability of the two separate sets of code mentioned. Other banks are advising that only cross-border payments being sent to China are required to claim the purpose of payment.  Why is HSBC requesting that I declare the purpose of payment for all cross-border RMB remittance even if it is not being sent into China? Cross-border RMB payments may be routed to a correspondent bank located in mainland China through CNAPS2 even if the ultimate beneficiary is out of China. Per CNAPS2 standard the purpose of payment code is compulsory. To avoid potential delay or rejection due to the absence of purpose of payment code, HSBC thus requires customers to indicate purpose of payment code in all cross-border RMB payment instructions, regardless of the destination of the beneficiary. Are there any changes to the eligibility of cross-border RMB payment types due to the CNAPS2 migration? Do I need to provide documentation proof at the time I declare the purpose of payment? The current regulation of the eligibility of cross border RMB payments remains the same. Documentation proof is not compulsory when making cross-border RMB remittances. Whether the remitted funds can be credited to a beneficiary is subject to documentation checking requirements at the beneficiary bank. When will CNAPS2 be fully operated in mainland China? There is no definite date of the national CNAPS2 migration. PBOC is planned to complete the migration in 2014. The plan may subject to change by PBOC. Will there be any change required on the cross-border RMB payment instructions set up/prepared prior to when the purpose of payment requirements take effect (for example, Standing Instructions set up for Outward Telegraphic Transfer denominated in RMB, payment instructions or the payment templates saved on HSBCnet, etc.)? Yes. Please revise the respective instruction(s) or payment template(s) with the provision of the HSBC purpose of payment code before the respective payment release date. For onscreen payments changes will need to be completed after 17 March, 2014. I am a Financial Institution; will there be implications to inward RMB payments received? Before the completion of CNAPS2 national migration in mainland China, your bank may receive RMB cross border payments from banks (i.e. inward payment) with purpose of payment code in the format of CNAPS, CNAPS2 or bank-specific. Based on your bank’s policy and regulation requirement, you may need to confirm with the sending bank the meaning of the code for your further processing. I am a Financial Institution; do I need to provide the purpose of payment when there is a return of payment? Yes. In case there is payment instruction returning to HSBC, the purpose of the original inward payment should be quoted in the respective cable message. Will there be any charge imposed for cross-border RMB payment without purpose of payment code in place? There are no additional charges at the moment apart from any current tariffs in place for handling payment returns or rejections as well as the costs borne by the correspondent/beneficiary bank. Please note that HSBC reserves the right to review the cost implication and may apply to Financial Institution customers with a 30-day notice period.
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