US online payment service provider PayPal will set up an international e-commerce hub in southwest China's Chongqing Municipality, the company said.

PayPal and the Chongqing government will jointly set up a foreign exchange settlement platform, and the hub will also include services such as telesales, e-commerce training and verification.

"Business to Business and Business to Consumer transaction volumes are rising at a very high speed and e-commerce will eventually have a similar market size compared to import and export businesses," Chongqing mayor Huang Qifan said at the signing ceremony on Tuesday. Huang added that the hub will also help the city become an international e-commerce settlement center.

Chongqing hopes international e-commerce transactions will reach US$10 billion in five years.

The foreign currency settlement service is likely to begin in the middle of next year after it gains regulatory approval from the State Administration of Foreign Exchange.

The transaction volume of China's online payment market totaled 725.5 billion yuan (US$109 billion) in the first nine months of the year, boosted by the booming e-commerce sector, according to Analysys International.