What is a bank account license for a Chinese company? What should be paid attention to in the overseas payment process?
If the system requires you to pay to a bank account of a Chinese company, you may be slightly wary of making overseas payments in unfamiliar areas. You may be concerned that if there is a problem with the transaction, it will be difficult or even impossible to solve the problem. In some cases, you may even worry that you are not dealing with a real Chinese company, but with some kind of scam.
In any case, you can alleviate these problems by confirming the permitted bank account of the Chinese company and making payment only. In the ideal world, the solution will work in all cases. However, companies in China usually require payment to accounts other than those for which they have a bank account license. In most cases, this should not cause an alert; it is important to check that you are remitting to a business account rather than an individual account.
What is a bank account license for a Chinese company?
When a Chinese company registers for business, it needs to obtain many licenses and official documents:
l Business license
l Bank account license
l Tax registration certificate
l Organization code license
Depending on the company's work, additional certificates and licenses may be required. A bank account license is almost like a passport for a company's official bank account. It is intended to prove that this is a real bank account and is truly related to the company. It will provide details of the account and the company, including the bank account number, the bank operating the bank, the company to which the company belongs and the legal representative of the company.
It is perfectly legal to obtain a copy of this document when conducting business with a Chinese company. We always recommend that you obtain a copy of the business license of a Chinese company for some basic checks. You can also request a copy of the bank account license, which will give you enough information to insist that only payments are transferred to the official account. Unfortunately, however, this approach may not work in all cases. Although you should decline to pay to an individual account, in some cases you may need to pay to a business account that the company does not have a license.
Should you only send payments to the company's permitted bank account?
If you want to reduce the likelihood that payments will go to a bank account that is not due, paying only to a bank account that is licensed by your company will be a good way to achieve this. We've had a situation where someone we met at a trade show persuaded someone outside China to pay a large amount of money to an individual account. "Company representative" cannot be found when the transaction has no result. In this case, it is usually rare to do so. This risk can be mitigated by requiring payment from a licensed bank account by ensuring that you are paying for an officially registered organization, not an individual.
As you can imagine, an untrusted organization can still have a real bank account license for its bank account. In other words, a bank account license is not a guarantee that the company will do what you expect, but a guarantee that your money will actually arrive at the company in that name. In general, however, a bank account license and business license can be a good way to ensure that you deal with a real company.
Although we would like to recommend that you only use the license account for payment, it is not realistic in many cases. In China, companies usually require payment to a bank account other than their bank account license. Therefore, while you may have a policy that you would prefer to use a licensed bank account for payments where possible, it may not be wise to use it as a specific policy to do business with a Chinese company.
Instead, you need to make sure that the account you are paying for is a business account, not an individual account. It's dangerous to pay with a personal bank account because they are much less restricted and they are less monitored than a corporate account. Moreover, although it can be imagined that an untrustworthy person may use a commercial account for evil purposes, in all the horror stories we have heard, it is to pay a personal bank account rather than a commercial account.
In summary, you can grade the payment security of bank account of China as follows:
1. Highest security: pay only to licensed bank accounts that you have licensed.
2. Minimum security: payment to corporate accounts only.
3. Danger: payment to personal account.
If the safest option is to use only a licensed bank account for payment, why do some Chinese companies (including US) sometimes require other accounts for payment? There are many reasonable reasons to do so, which is why we recommend that you only make sure that you pay for business accounts, not only permitted bank accounts.
Why the company may require payment to another bank account
If your company requires you to pay with an account other than the one it has licensed, you should first check that the account is a company account. If so, they may request payment to the standby account for one of the following reasons:
1、The company's permitted bank accounts may use Renminbi, while they also operate separate accounts in other currencies, such as the US dollar. They may want you to pay into their USD account to avoid an adverse exchange rate.
2、A company may have multiple RMB accounts, for example, to clearly distinguish different purposes or account functions. As long as all accounts are enterprise accounts, this will not cause you any suspicion.
3、For various reasons, the company may conduct banking business in multiple banks. Again, this is usually legal and does not raise doubts.
However, if a company requires payment to an individual account, in most cases you should treat it as suspicious at most. A request for payment to an individual account may prompt for one of the following:
1、The company is charging part of its income into an individual account to avoid paying taxes on it. No excuses or excuses from the company will be accepted; this is illegal and should be avoided.
2、To avoid charges and taxes, merchants may use their personal accounts rather than their business accounts. This is also illegal. We suggest that you do not tolerate this kind of behavior among any business partners in China.
3、You are actually dealing with an intermediary who wants to deposit money into their personal account so that they can reduce it. This may not be illegal, but for both companies, it is clearly not ideal and may add unnecessary risks to the transaction.
4、You are actually dealing with people who are trying to cheat, so you cannot establish a legitimate commercial bank account.
As you can see, the potential scenario of using a personal account for business transactions should be enough for you to do business with anyone who is trying to use the personal account for business. We recommend that you pay only to a business account and not to an individual account.
Request to change payment details: "new bank account fraud"
The last problem you should be aware of is that any request from a Chinese company with whom you have business to change the bank account used to receive payments should be highly suspect. Such a request is likely to be a hoax, or not related to the real company, or made by a malicious actor (at least in some way with access to the company). Generally, Chinese companies do not tend to change banks or suddenly set up new payment accounts. If you receive such a request, be careful and try to confirm its legitimacy as high as possible.