A Chinese ministry wants to cap the fees associated with accepting credit cards now that card penetration and spending in the country has made it financially feasible for card issuers and the country’s card network to support the limits.
The Ministry of Commerce last week proposed reducing the cost of processing a credit card by reducing charges such as the interchange and network switch fees, according to a statement the government agency provided to PaymentsSource.
The ministry has presented a draft of the larger proposal to all commercial banks in China for comment, though a public version is not yet available.
According to a source with a state-owned bank, the interchange rate would be capped at 0.3% of the sale up to 100 yuan (US$15 or 12 euros). Also, on every credit card transaction, China UnionPay, the country’s sole card network, could charge merchants no more than 0.05% of the sale, capped at 5 yuan, in switch fees.
The proposed changes would affect small and midsize businesses in China positively, though there will be little direct impact on individual consumers, Meng Zhang, an analyst with China-based Analysys International, tells PaymentsSource.
“In the long run, the reduced credit card merchant fees can enhance business confidence, improve the bankcard acceptance environment, as well as improve operational efficiency throughout the business community,” Zhang says.
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