A China Merchants Bank Co Ltd branch in Shanghai. Five third-party payment service providers have received approval to handle yuan-denominated cross-border payments in the China (Shanghai) Pilot Free Trade Zone.

The China (Shanghai) Free Trade Pilot Zone launched cross-border yuan payment services on Tuesday under the guidance of the People's Bank of China, marking a milestone in the expansion of the international use of the yuan, said analysts.

Five third-party payment service providers have received approval to handle renminbi-denominated cross-border payments in the zone, the central bank's Shanghai head office said.

To carry out cross-border yuan payments, each of the five payment service providers will open a cross-border renminbi account at one of the Shanghai branches of five commercial banks. They are Industrial and Commercial Bank of China Ltd, Bank of China Ltd, China Construction Bank Corp, China Merchants Bank Co Ltd and China Minsheng Banking Corp Ltd.

People's Bank of China Shanghai head office had previously issued guidance to direct financial institutions to carry out cross-border renminbi payment services.

According to the central bank's guideline, companies with payment service licenses, whether they are registered in Shanghai or run subsidiaries in the pilot free trade zone, can provide renminbi cross-border payment services.

The pilot free trade zone was launched in September to expand international use of the yuan and financial liberalization, among other reforms to support free trade.

Analysts said the launch of the service in Shanghai's free trade zone marks a milestone for development of the zone's functions under the facilitation of financial services.