China Negotiating With Visa, Mastercard to Reduce Transaction Fees

China is reportedly negotiating with Visa, Mastercard and other global card issuers, seeking to reduce the fees they charge local merchants on foreign card transactions.

The Payment & Clearing Association of China has proposed that the card issuers reduce their fees from the current range of between 2% and 3% to 1.5%, Bloomberg reported Friday (June 21), citing unnamed sources.

Mastercard told Bloomberg that it has received such a proposal and that it is working with payment industry partners to lower costs, according to the report.

The association’s proposal is part of China’s efforts to encourage merchants to accept foreign cards, the report said. Currently, most merchants are reluctant to do so because of the processing fees.

Mastercard said in June 2023 that it teamed up with Alipay to offer a new payment option for international visitors to China, allowing them to go cashless while traveling around China’s mainland.

The Alipay-Mastercard partnership allows overseas card transactions completed on the Alipay digital wallet to be processed through Mastercard’s omnichannel payments platform. This means that small and medium-sized businesses (SMBs) can easily accept payments from anywhere in the world.

“The new service offered by Alipay and Mastercard will not only enable a better experience for international travelers when visiting China but will also unlock more business opportunities for merchants on the Alipay open platform as global travel is set for rapid growth,” Venetia Lee, general manager of Ant Group Greater China International Business, said in a press release announcing that partnership.

Also in June 2023, Tencent said that it would allow Visa credit cards to be linked to its WeChat app, enabling foreign tourists visiting China to pay with the WeChat app.

It was reported at the time that linking international credit cards to the WeChat app would solve the challenge foreign visitors have faced when trying to pay for goods and services in China.

Many shops and restaurants in the country accept only mobile payments, and only some businesses were allowed to process foreign-issued credit cards.

Prior to this agreement, foreign visitors who wanted to use Tencent’s mobile payments network had to set up a Chinese bank account.