Residents from Hong Kong and the mainland will soon be able to use a new fast payment tool to conduct cross-border transactions involving small sums in real time from Sunday, with monetary authorities from both sides hailing the launch as a milestone in deepening connectivity.

The announcement came after the People's Bank of China and Hong Kong Monetary Authority's launch on Friday of the cross-border payment method, Payment Connect, which links the electronic payment network developed by the latter – Faster Payment System (FPS) – with the mainland's Internet Banking Payment System.

The linkage allows cross-bank transactions using simply the recipients' mobile numbers or account numbers, with small-value payments settled instantly at any time.

"I'm very much looking forward to Sunday when we will further connect the fast payment systems between Hong Kong and the mainland using Payment Connect, as it breaks through the boundaries of time and place," Monetary Authority chief executive Eddie Yue said at the launching ceremony in Beijing.

"Residents from both places will only need to click on our phones, enter the recipient's mobile phone number, and they can easily make small personal remittances or pay for various living expenses [using it], achieving simple and immediate transfers," he said, adding that the FPS system has been very popular among Hong Kong residents since 2018.

Under the new service, residents can use FPS to transfer small sums of up to HK$10,000 each day per account to the mainland, while the total annual remittance limit is set at HK$200,000.

And such transfers will not affect another 80,000 yuan of northbound daily quota set for local residents.

While there's no limit set for mainland residents using the tool for southbound transfers, they will still be subject to the current annual foreign exchange quota of US$50,000 per person.

The launch of the tool also comes as the number of FPS users approaches 17 million, with one million new accounts being set up in the first five months of the year.

The number of registered users is far more than the total population of Hong Kong as an individual can have more than one account.

For his part, People's Bank of China governor Pan Gongsheng said the launch marks another milestone in the deepening of financial connectivity between Hong Kong and the mainland, as Beijing highly values the SAR as a global financial centre.

"The cross-border Payment Connect, which is directly connected to the infrastructure of the monetary authorities of the two places, provides online fast bilateral local currency and bilateral renminbi remittance services for residents of the two places, which will further enhance the efficiency and experience of cross-border payments," he said.

"It'll also provide convenience for economic and trade cooperation as well as personnel exchanges between Hong Kong and the mainland, injecting new vitality into Hong Kong's development while further promoting the internationalisation of the renminbi," he added.

The two sides have been working on the service since August.

The new tool will see six SAR banks join the first batch of institutions to provide such services – Bank of China (Hong Kong), HSBC, Hang Seng Bank, Bank of East Asia, as well as two state-backed lenders.

There'll also be six mainland banks supporting the tool.