China Pressures Visa and Mastercard to Slash Transaction Fees for Foreign Visitors

According to a source familiar with the matter, China is urging Visa Inc. and Mastercard Inc. to lower their bank card transaction fees in the country. This initiative aims to facilitate payments for foreign visitors.

The Payment & Clearing Association of China is discussing with global card issuers, including Visa and Mastercard, to reduce the fees charged to local merchants on foreign card transactions. The association has proposed lowering the fee from 2-3% to 1.5%, the source said, requesting anonymity due to the talks’ private nature.

China has asked Visa $V and Mastercard $MA to lower bank card transaction fees from 2-3% to 1.5%, aiming to facilitate payments for foreign visitors.

The Payment & Clearing Association of China is negotiating with the global card issuers to implement the fee reduction.… pic.twitter.com/0tqnWfsTHn

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These negotiations are ongoing, and the specifics of the fee reduction may still change.

According to a company spokesperson, Mastercard confirmed that it received the proposal from the industry association and committed to collaborating with payment industry partners to reduce costs for local merchants accepting foreign bank cards. The association and Visa did not immediately respond to requests for comment.

The industry group released a proposal to global card issuers earlier this week, urging them to implement preferential fees to encourage local merchants to accept foreign bank cards. The group announced this in a statement on its website Tuesday, though it did not specify the fee reduction details.

Impact of High Processing Fees on Chinese Retailers

China’s retailers are increasingly digital and cashless. Additionally, more than 80% of daily consumption transactions take place on mobile platforms, according to figures from Chinese card payment company UnionPay. Alipay and WeChat Pay dominate digital payment services, accounting for a combined 91% market share.

Since July 2023, visitors have been able to link their Visa (V) and Mastercard (MA) accounts to China’s most popular mobile payment platforms. This allows them to book taxis, ride the subway, and pay for goods and services at millions of outlets across the near-cashless country.

The move marked a revival of efforts by Alipay and WeChat Pay to accept foreign credit cards after they provided some limited access in late 2019. The companies said previously that they were acting under the guidance of Chinese regulators as Beijing seeks to attract foreign investment and international travelers to boost its flagging economy.

Still, many hesitate to accept foreign bank cards due to high processing fees. China aims to make payments more convenient for foreign visitors by reducing these fees. In March, the State Council encouraged local authorities to push more merchants to accept foreign cards.