The Bank of China Hong Kong Limited and China UnionPay have begun offering a Shenzhen-Hong Kong cross-border automatic payment service through a BOC credit card, the bank recently announced.

The service, which began on August 9, targets Hong Kong citizens who own property or do business in adjacent Shenzhen.

Dickson So, General Manager at BOC Credit Card (International) Limited, said in a statement that the bank plans to eventually expand the service elsewhere in China’s Guangdong province, given the strong market demand for it.

About 200,000 of Hong Kong’s citizens own property in Shenzhen, So says. “They all have to pay utilities and phone charges.”

The cross-border credit card has both a Chinese yuan account and a Hong Kong dollar account, enabling consumers to pay bills for public utilities and services including cable TV, telecom and Internet provided by several Shenzhen companies. The companies include China Southern Power Grid, Shenzhen Gas Corporation, Topway Cable TV, and China Mobile GoTone. 

Shenzhen Bankunion will transfer payments consumers authorize to be automatically paid from the card's yuan account before the bill is due. Each transaction will have a service fee of 8 yuan (US$1.2) as of March 2011. The service is free as of now.

Hong Kong citizens must apply for both the credit card and the automatic-payment service at BOC branches that are registered with Shenzhen Bankunion Easy Business Solution Financial Service Limited, an affiliate of China UnionPay.

Though such an automatic payment service has strong potential in China, it is not an easy business to execute, Hao Hongrui, an analyst at Beijing-based research firm DHD Consulting, tells PaymentsSource.

A crucial element for success is ensuring that various participants’ transaction-processing systems are compatible with the bank’s systems, Hongrui says. “In this case, the clearing system of BOC must be compatible with Shenzhen Bankunion’s system, including the external interface and the system format.”

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