China Advocates Fee Cuts For Mastercard And Visa Transactions

China is urging Mastercard Inc. and Visa Inc. to decrease their fees for bank card transactions in the country, as per a source who knows about the situation. This action is part of a plan to make it easier for foreign visitors to make payments.

The Payment & Clearing Association of China discusses decreasing foreign card transaction fees for local merchants, with global card issuers, including Mastercard and Visa.

China Aims To Reduce These Fees To Improve Payment Options For Foreign Visitors

According to the source, the association has proposed reducing the cost from the current range of 2-3% to 1.5%. The source asked to remain anonymous because the discussions are private. These negotiations are still in the process, and the details of the fee reduction might change.

Mastercard has confirmed that they received the proposal from the industry association and stated its dedication to working with payment industry partners. The aim is to reduce costs for local merchants who accept foreign bank cards. However, there has yet to be a response from either the industry association or Visa to requests for comments.

In the UK, Mastercard and Visa are being sued by merchants over claims of overcharging on interchange fees. The decision from the Competition Appeal Tribunal allows collective lawsuits against the firms, allowing merchants to seek damages together.

These legal cases contest fees charged when customers use Mastercard and Visa. It has added another legal challenge for the payment giants amid ongoing disagreements over interchange fees in the UK.

The Proposal Aims To Motivate Local Merchants To Accept Foreign Bank Cards

Previously, the industry group presented a proposal to global card issuers with the aim of lowering fees, as stated in a statement released on its website on Tuesday last week. The statement didn’t specify the exact fee reduction.

Issuers were urged to work with their network members to implement beneficial fee arrangements to motivate local merchants to accept foreign bank cards.

China’s retail sector is increasingly shifting towards cashless and digital transactions. However, many merchants are reluctant to take foreign bank cards because their processing fees are incredibly high. China aims to decrease these fees to enhance payments for foreign visitors. In March, the State Council encouraged local authorities to urge new merchants to accept foreign cards.

Mastercard and Visa offer different services because they need to give credit or issue cards themselves. Instead, banks or other companies partner with Visa and Mastercard to provide the payment cards.