Why China Wants Foreign Cards in Its Market?

China’s Payment Landscape: Mobile Dominance and Foreigner Challenges

In 2020, the PBOC reported that mobile payments accounted for a staggering 86.6% of non-cash transactions, while credit cards only contributed 5.5%. This shift to mobile payments, though efficient for locals, poses difficulties for foreign visitors, who often struggle to access these platforms due to stringent requirements such as a Chinese bank account and ID. The result is a reliance on cash or foreign credit cards, both of which have limitations and are not universally accepted, especially in smaller cities and rural areas.

The Impact on Tourism and Business

This payment disparity not only affects the experience and satisfaction of foreign visitors but also hinders China’s potential to attract more tourists and businesspeople, particularly in the post-pandemic era. Despite being the fourth most visited country in 2019, China’s tourism revenue could significantly increase with a more convenient and universal payment method, positively impacting spending patterns and overall impressions of the country.

PBOC Initiatives: Encouraging Acceptance of Foreign Payment Cards

Recognizing the need for change, the PBOC has initiated several measures to encourage local businesses to accept foreign payment cards. Deputy Governor Zhang Qingsong stated in February 2024 that banks and various vendors are actively encouraged to accept foreign bank cards. Collaboration with international card networks like Visa and Mastercard aims to seamlessly integrate foreign cards into Chinese payment systems, reducing the current limitations and fees associated with their usage.

Paving the Way with Digital Yuan

In addition to promoting foreign card acceptance, the PBOC is pushing the development of the digital yuan, a central bank digital currency (CBDC). By allowing foreign visitors to use WeChat Pay and Alipay without providing ID information for transactions under $500, and exploring the possibility of raising this threshold, the PBOC aims to create a more inclusive and convenient payment option. Furthermore, foreign visitors can now upload digital yuan to their wallets using Mastercard or Visa credit cards, showcasing China’s commitment to technological innovation and financial inclusivity.

Conclusion

China’s efforts to enhance its payment environment for foreign visitors align with its broader economic recovery and growth strategy. By making payments more accessible and convenient, the country aims to attract more international visitors, boost their spending, and improve overall satisfaction. The introduction of the digital yuan not only reflects China’s commitment to innovation but also signals its intent to challenge the dominance of the US dollar on the global stage. In essence, the PBOC’s encouragement for local businesses to accept foreign payment cards is a strategic move that benefits both China and its international guests, embodying China’s vision and confidence as a rising global power.

Disclaimer

This article has been created on the basis of internal data, information available publicly, and other reliable sources to be believed. The article may also include information which are the personal views/opinions of the authors. The information included in this article is for general, educational, and awareness purposes only and is not a full disclosure of every material fact.