In order to facilitate the payment experience of foreign nationals coming to China, domestic payment institutions and financial institutions have launched new strategies.
On September 11th, WeChat Pay disclosed new measures for its foreign card services, further increasing investment in actively bearing international card transaction related fees. It is reported that foreign nationals who come to China and register for WeChat Pay do not need to pay any transaction fees for international card transactions with a single transaction amount of 200 yuan or less. As a new user, they can also enjoy the "144 hour visa free" period, where they can consume zero transaction fees within 1000 yuan per day for seven consecutive days starting from their first transaction. This activity will continue until the end of 2024.
According to international practice, if a single international card transaction exceeds 200 yuan, users are required to pay a 3% handling fee. This has affected the willingness of some foreign nationals to make "large" purchases in China. The new initiative of WeChat Pay can exempt some international card transactions worth over 200 yuan for foreign nationals coming to China from payment fees, further enhancing their consumption and payment experience in China.
As payment institutions continue to optimize the payment experience for foreign nationals coming to China, how to reduce the burden of foreign card processing fees on domestic merchants has also attracted attention from the industry.
Previously, Visa and Mastercard, the two major international card organizations, worked together with domestic acquirers to reduce merchant processing fees for accepting foreign cards. However, this fee reduction measure is mainly aimed at offline POS card consumption scenarios. Many "online transactions" still cannot enjoy the corresponding rate reduction "discount". For example, foreign nationals who come to China and use WeChat Pay to purchase a certain item from an online store are still considered as "online transactions" by the International Card Organization and cannot enjoy the reduction in foreign card processing fees.
It is reported that domestic payment institutions have communicated with international card organizations and card issuing institutions on how to further optimize the foreign card acceptance rate in the "foreign card internal binding" mobile payment link, and achieve a win-win situation for all parties. An industry insider pointed out, "Currently, all parties still need to continue to work hard to reduce the foreign card acceptance fees for domestic merchants
In July of this year, the transaction amount of WeChat Pay for foreign visitors to China increased nearly fivefold year-on-year
On September 10th, the State Council Information Office held a regular briefing on State Council policies. Ma Li, the head of the Industry Development Department of the Ministry of Culture and Tourism, introduced that in the first seven months of this year, the number of inbound tourists increased significantly, with 5.722 million foreign tourists visiting China for sightseeing and 3.803 million conference and business activities, an increase of 403% and 81.5% year-on-year, respectively.
In addition, the Daily Economic News reporter noticed that the "144 hour transit visa free" policy has now expanded to 37 ports and 54 countries, attracting more and more foreign nationals to live, work, and travel in China. The willingness of foreign nationals to consume in China is also increasing day by day. They not only purchase culturally distinctive gifts from various parts of China, but also enjoy tasting local cuisine.
However, the practice of paying a 3% handling fee for a single international card payment transaction exceeding 200 yuan has also affected the willingness of foreign visitors to China to consume. In response to this situation, WeChat Pay recently took the initiative to bear the international card transaction related fees within the limit of 1000 yuan. It is reported that foreign nationals who come to China and register for WeChat Pay do not need to pay any transaction fees for international card transactions with a single transaction amount of 200 yuan or less. New users can also enjoy zero transaction fees for international card transactions within the "144 hour visa free" period, starting from the first transaction for seven consecutive days and within a daily consumption limit of 1000 yuan.
WeChat Pay stated that this initiative is planned to continue until the end of 2024. So, how much international card transaction fees will WeChat Pay bear?
Dai Haiyong, the head of Tenpay's foreign exchange business, revealed at the 13th Payment and Clearing Forum that since the comprehensive upgrade in July 2023, WeChat Pay has provided services to millions of foreign visitors to China, with a high growth trend in transaction volume and amount, reaching tens of millions and billions of yuan in scale. As for the data in July this year, the number of transactions increased by nearly 4 times year-on-year, and the transaction amount increased by nearly 5 times year-on-year. Regarding the recently held China International Fair for Trade in Services, WeChat Pay will set up a special service desk for convenient entry payment, to continuously ensure payment services in high-frequency scenarios such as transportation, commercial districts, scenic spots, and exhibitions.
The above-mentioned industry insiders revealed that given that WeChat Pay mainly covers a large number of "small" consumption scenarios, the amount of international card transaction fees that WeChat Pay needs to bear mainly depends on the international card transaction status of foreign nationals coming to China. At present, the proportion of transactions within 200 yuan in the WeChat Pay scene is about 90%. He pointed out that the main purpose of WeChat Pay's promotion of the above measures is to attract more foreign visitors to China to use WeChat Pay in the process of binding their foreign cards, further improving payment convenience and transaction scale, which will help enhance the discourse power of domestic payment institutions in the negotiation process of business cooperation with international card organizations and issuing banks
How can domestic mobile payment services achieve a "two-way rush" with foreign card payments?
At the same time as the reduction of domestic and international card transaction fees for foreign nationals coming to China, how to further reduce the rate of foreign card acceptance by domestic merchants has also attracted attention from the industry. There is a significant difference in current domestic and international payment rates, with the acceptance rate for internal card payments for domestic merchants generally lower than 0.6%, and in some industries as low as 0.38%; The foreign card acceptance rate for domestic merchants is relatively high, generally ranging from 2% to 3%. Many domestic merchants feel that the operating cost of accepting foreign card payments is relatively high, and they are cautious about accessing foreign card payment networks.
In order to encourage domestic merchants to actively access the foreign card payment acceptance network, financial institutions such as Industrial and Commercial Bank of China and Tenpay have continuously invested considerable funds over the past year to subsidize foreign card acceptance rates and reduce the cost of foreign card acceptance for domestic merchants. But this has resulted in domestic payment institutions and financial institutions bearing higher fees for accepting foreign card payments.
The reporter learned that after Visa and Mastercard, the two major international card organizations, worked with domestic acquirers to reduce merchant processing fees for accepting foreign cards, several payment institutions are currently strengthening communication with the international card organizations, striving to persuade them to further optimize online transaction processing fees. Upon investigation, the International Card Organization still categorizes the offline QR code payment method commonly used by tens of millions of small and micro merchants in China as "online transactions" and does not provide corresponding discounts on foreign card processing fees.
However, the industry insider mentioned to a reporter from the Daily Economic News that "currently, there has been no latest progress in communication
On the one hand, in order to persuade international card organizations to further optimize online transaction acceptance rates, domestic payment institutions need to first "increase" the scale of foreign card acceptance payment transactions, so that international card organizations can see that this channel can bring considerable business development space and are willing to cooperate with domestic payment institutions to jointly expand this market cake; On the other hand, it is also necessary to maintain communication with the International Card Organization to make them aware that China's mobile payment service providers connect with millions of small and micro merchants for consumption scenarios, which can quickly stimulate the higher consumption potential of foreign nationals coming to China and achieve a win-win situation for all parties.