Shanghai automates freight FX payments with blockchain
The Shanghai branch of China's foreign exchange regulator has launched a new digital tool that lets banks verify sea freight invoices online and prevents duplicate payments, cutting paperwork for thousands of trading firms.
The “Facilitated Foreign Exchange Payment for Domestic Freight” scenario went live on April 1 on the Cross Border Financial Service Platform, operated by the State Administration of Foreign Exchange (SAFE). It connects the platform's shipping trade blockchain network with Shanghai's tax bureau database, allowing one click invoice authentication and cross bank payment recognition.
Until now, freight forwarders and trading companies in Shanghai – a global shipping hub – had to submit stacks of paper or electronic invoices for each domestic freight fee payment. Banks manually checked each invoice, a slow process that also risked the same invoice being used multiple times.
The new system adds an automatic “signature” to an invoice once it is paid, making duplicate claims impossible. Banks can verify authenticity in seconds. Corporate clients no longer need to travel to bank branches with physical documents.
On launch day, Bank of China's Shanghai branch and Agricultural Bank of China's Shanghai branch processed the first batch of transactions under the new model. Participating banks said the tool solves both the authenticity and uniqueness problems at once, reducing compliance costs and operational risk.
SAFE Shanghai said it will now promote the scenario to more banks and enterprises, and explore additional blockchain based applications for cross border trade.
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