An official from the People's Bank of China said China is encouraging banks and businesses to accept foreign bank cards and is considering other measures to make mobile payments more convenient for international tourists. Relevant written feedback obtained by CNBC showed that China encourages banks and businesses such as hotels, restaurants, shopping malls and cafes to accept foreigners’ use of bank cards. The above statement comes against the backdrop of Beijing's increased efforts to attract foreign tourists and business people to China. After optimizing and adjusting strict epidemic prevention measures, China has launched visa-free policies for some European and Southeast Asian countries in recent months.
In recent years, mobile payment has developed rapidly in China. It is very convenient for locals to pay by scanning the QR code with their mobile phones. However, due to restrictions in the financial system, it is often difficult for foreigners to use mobile payments in China, and some local merchants in China are unwilling to accept foreign credit card payments. But the situation has begun to change in recent months. Last summer, two major mobile payment apps, WeChat Pay and Alipay, began allowing verified users to link international credit cards such as Visa.
Relevant sources said that China is fully aware of foreign tourists' concerns about privacy, and is taking this issue seriously and taking relevant information protection measures. Zhang Qingsong, deputy governor of the People's Bank of China, visited the overseas guest payment service demonstration area at Beijing Airport for research and guidance on the 5th. The People's Bank of China stated that it will make improving payment convenience for overseas visitors a key task and strive to improve the level of payment services.
Visa executives said at the end of January this year that the number of inbound and outbound tourists from China continues to increase, although it is still below the level of 2019. Foreign financial services companies are optimistic about the Chinese market and believe that it will be more open. In November last year, the People's Bank of China issued a bank card clearing business license to Wanshi Network Co., Ltd. Industry insiders said that China’s focus on supporting foreign tourists’ domestic payments includes allowing large-value transactions with bank cards and small-value transactions with mobile payments. It is estimated that there are currently 13 overseas mobile wallet applications that can directly enable scan-code payments in China. In September last year, Ant Group announced that users in Singapore, South Korea, Thailand and other countries and regions can use 10 e-wallets commonly used in their hometowns to smoothly scan QR codes to pay within China. (Author Evelyn Cheng, translated by Zhen Xiang)
Further reading
Is mobile payment difficult for foreign tourists?
In 2023, Jiang Shan, who returned to Shanghai from Hong Kong for the first time, found that he had "no money to spend".
During the epidemic, because he was away from Shanghai for a long time, all the bank accounts bound to Alipay and WeChat Pay were frozen because they had not been used for too long, and many places did not accept his attempts to use POS machines. He realized that “if this continues, it will be very inconvenient for many overseas people to come back or travel.”
As a member of the Shanghai Municipal Committee of the Chinese People's Political Consultative Conference and executive chairman of the Hong Kong Greater China Association, Jiang Shan proposed a proposal "Recommended to further take effective measures to promote the facilitation of domestic payments by overseas persons" at the second session of the 14th Shanghai Municipal Committee of the Chinese People's Political Consultative Conference in 2024. He believes that many countries and regions, including developed countries in Europe and the United States, still use credit cards and cash as the main forms of payment, and not many people use mobile payments. Different payment habits have caused payment difficulties for foreigners entering the country and triggered a series of derived "digital barriers" and "digital divides."
This issue is even more urgent now. Recently, China’s visa-free “circle of friends” has continued to expand, and more and more countries have officially entered the “visa-free era”. On January 28, China and Thailand signed an agreement on mutual visa exemption for ordinary passport holders; on January 25, China and Singapore signed an agreement on mutual visa exemption for ordinary passport holders; previously, starting from December 1, 2023, China implemented a unilateral visa exemption policy for ordinary passport holders from France, Germany, Italy, the Netherlands, Spain and other countries.
As the exchanges of people between China and foreign countries have become closer, the problem of payment inconvenience for some overseas people in China has attracted attention. On December 28, 2023, Zhang Qingsong, deputy governor of the People's Bank of China, said at the State Council's regular policy briefing, "In order to solve this problem, the People's Bank of China, together with relevant departments, has established a special working mechanism, issued guidance, and is organizing various units to advance various tasks in an orderly manner. The solution can be summarized as 'swipe cards for large amounts, scan codes for small amounts, and pay in cash.'"
According to many interviewees, the payment issues of overseas people in China involve many fields such as business, finance, culture and tourism, transportation, foreign affairs, public security, etc. It is the last mile for foreigners on their way to China and requires the participation and efforts of many parties. How to provide visitors with the best experience is the core issue.
Credit card is not easy to use and the handling fee is too high?
"In 2023, many of my colleagues had troubles after coming to China." David, a Canadian living in China, works in a company in the quality inspection industry, so employees often have to work in export factories outside China's first- and second-tier cities. After arriving at these places, David and his colleagues discovered that they could only swipe their cards at the hotel. There was no place to swipe their cards after leaving the hotel. Most places only supported payment by scanning QR codes, and it was inconvenient to use cash.
“Even if you pay a prepayment at a nearby restaurant, when you want to use a credit card to pay, the restaurant will often pretend that the machine is broken or they don’t remember how to use it and refuse to swipe the card.” David mentioned that colleagues can only eat at the buffet in the hotel.
At the 2024 Tourism High-Quality Development Conference, Wu Huanyu, deputy general manager of marketing for Mastercard Greater China, said that according to Mastercard data, the global cross-border payment transaction amount in the third quarter of 2023 has reached 155% of the same period in 2019. Although the resilience of global consumption is considerable, inbound travelers still face difficulties such as insufficient foreign card acceptance coverage when making payments in China.
Zhu Junjie, who has been engaged in international travel for more than ten years, received more than a thousand foreign tourists in 2023. He also mentioned that these tourists can swipe their cards in some big cities and large shopping malls, but there is no way to swipe their cards in many small cities and small shops. But in fact, even in first-tier cities, the situation may not be optimistic.
In May 2023, the Shanghai Municipal Government's Counselor's Research Group conducted a survey on improving the convenience of domestic payment for immigrants. When leading the research, Gu Xiaomin, the leader of the research team, found that international tourists generally want to pay with credit cards or near-field payments, but they are basically unwilling to use Internet-connected mobile payments.
During the research conducted by the research team, Gu Xiaomin found that due to the impact of the epidemic, the wild card acquiring business has gradually shrunk, and many wild card POS machines have withdrawn from the market. The research team commissioned a third-party agency to conduct on-site sampling surveys at 401 merchants in business districts and landmarks with a high frequency of foreign tourists in Shanghai. The results showed that foreign tourists most wanted to pay with credit cards and cash, but only 183 of the 401 merchants surveyed had installed foreign card POS machines, accounting for 45.39%, less than half.
Gu Xiaomin also mentioned that the handling fees for foreign card swiping are high, and the single transaction rate basically ranges from 2.5% to 3.5%, while the single transaction rate of Alipay is only 3.8 per thousand. Therefore, many merchants prefer to let foreigners use cash or Alipay and WeChat. The foreign card swiping rate is only 23.19%.
According to the 2023 Mastercard survey on foreign cards (i.e. international payment bank cards) in key business districts, in the four cities of Beijing, Shanghai, Guangzhou and Shenzhen, the coverage rate of foreign card acceptance by retail and catering merchants is less than 40%, and the coverage rate of merchants that can "snap cards" is less than 30%; in addition, the card consumption of overseas people is mainly concentrated in accommodation, reaching nearly 70%. In retail, catering, department stores and other merchants, related foreign card consumption needs to be strengthened.
"Relying on software and the Internet, scan-code payment became popular in China all of a sudden, and the acceptance of physical machines began to shrink." Dong Zheng, a senior researcher on credit cards, told China News Weekly that changes in payment behavior and payment acceptance environment have made it somewhat troublesome for foreigners to pay in China.
According to the feedback from many foreigners interviewed, in addition to the difficulty of swiping cards, the use of cash is also inconvenient. An international student from Beijing told China News Weekly that when he first arrived in Beijing, the driver could not get change after paying in cash because he did not know how to use taxi-hailing software and there was no mobile payment method. David mentioned that when using cash, 90% of merchants’ answer is “We don’t have change.”
In recent years, the People's Bank of China has also paid attention to the problem of refusing to accept RMB cash, and has continued to promote the work of rectifying the refusal to accept RMB cash. Those who are verified to be refusing to accept RMB cash will be punished and exposed in accordance with the law.
Zhu Junjie said that when international tourists enter China, their usual practice is to help foreigners exchange some RMB and help them with shopping. What should be noted is that when withdrawing cash from the bank, you should not just take out hundred-yuan bills, but more five or ten yuan in change so that you can spend it. “It’s getting more and more troublesome to cash out money, and I have to find ATM machines everywhere.”
China was once the world's largest ATM market, but volumes began to decline after peaking in 2018. In 2011, the number of ATMs fell below one million; in 2022, the number fell below 900,000. This situation also caused a lot of trouble in accessing cash.
“QR codes are a challenge for foreigners”
After living in China for more than a year, Wu Xinyu has completely adapted to China's "mobile payment" life and deeply appreciates its convenience. However, this summer, on the first day her cousin went to Beijing, she discovered that her cousin was confused about China's "online operations" and did not know "what software to use for what things" in China. Whether it's taking a taxi, ordering takeout, or booking a scenic spot, Wu Xinyu is the one who helps her cousin.
Especially when Wu Xinyu took her cousin on the high-speed train from Beijing to Shanghai, ordered a takeaway on the high-speed train, and had it delivered at the next stop, Wu Xinyu's cousin was shocked and felt the convenience of mobile payment.
However, the payment QR codes that can be seen all over the street are quite unfamiliar to her cousin. The cousin who exchanged 10,000 yuan didn't have many opportunities to use cash, so Wu Xinyu basically had to scan the QR code and pay on her behalf.
For Wu Xinyu's cousin, it is not easy to use such convenient services. For short-term international tourists, they face great difficulties if they want to use their own WeChat Pay or Alipay. Alipay can generally pass passport real-name authentication, but it needs to be bound to a Chinese bank card to be able to pay; WeChat can be registered, but without a bank card you cannot real-name, let alone the payment function.
"If a foreigner has lived in China for more than half a year, it will be more convenient to use software to make mobile payments after applying for a mobile phone number and bank card. However, if you only come to travel for less than a month, there may be some difficulties. Because it is not feasible to apply for a phone card or a bank card." Wu Xinyu told China News Weekly.
In July 2023, in order to solve the problem of payment convenience for foreigners coming to China, Alipay and WeChat Pay successively supported binding overseas bank cards. This means that overseas users can register with overseas mobile phone numbers, and support authentication including Mainland Travel Permit for Hong Kong and Macao Residents (Return Permit), Mainland Travel Permit for Taiwan Residents (Taiwan Compatriot Permit), Residence Permit for Hong Kong and Macao Residents, Residence Permit for Taiwan Residents, Permanent Residence ID Card for Foreigners, International Passports, etc.
According to Alipay related personnel, overseas users only need two simple steps to activate Alipay: first, download and register the Alipay App; then, bind a bank card. Currently, it supports bank cards from mainstream international card groups, such as Visa, Mastercard, JCB, DinersClub, Discover, etc.
WeChat payment related people said that after registering and logging in to WeChat, only two steps are required - find the entrance to fill in the information and bind the card for authentication to complete the binding. Overseas users no longer need to bind domestic bank cards, and can also experience various payment methods covering a variety of scenarios, including scanning codes, being scanned, WeChat mini programs, In-APP and other payment methods.
However, according to feedback from many interviewees, registration and login often encounter problems. After the epidemic, many inbound travelers need to retrieve their account number for identity authentication on payment apps, or trigger WeChat’s 15-day cooling-off period. In this case, WeChat Pay related people mentioned that in order to solve the impact of various security measures for some overseas users who need to use the payment function normally, attempts have been made in some ports of entry, first-tier cities and other areas to gradually reduce the frequency of various verifications when overseas users log in in a grayscale manner. However, optimization in this area still requires exploring a balance between security compliance and convenience.
In addition, when many people coming to China want to register and bind a bank card, they will encounter problems such as the inability to verify the mobile phone and slow real-name information authentication. Moreover, after binding a foreign card, it cannot support red envelopes, transfers or even restrict some consumption scenarios. This means that there are still bottlenecks in mobile payments.
"QR codes are a challenge for foreigners." In 2021, David's family flew back to Beijing from Canada. David's wife is Chinese. With the help of his wife, David adapted to mobile payment. "This process is also very difficult.
In China, the mobile payment registration threshold of “QR code scanning + SMS verification + real-name information authentication” often leaves many foreigners in China at a loss.
According to previous media reports, PwC conducted a survey on the use of mobile payment among more than 21,000 respondents in 27 countries and regions. Globally, the average growth rate of mobile payment business is 24%, and 34% of consumers use mobile phones to pay for shopping. Data comparison shows that China's mobile payment penetration rate is about three times the world average.
David said that many foreigners did not know about mobile payment before arriving in China. Many of his friends don't even have smartphones yet. Even though some payment apps have good English systems, their lack of understanding of mobile payments makes them worry about issues such as privacy and security. David said that when he binds the payment app on a daily basis, the bank account he binds can only deposit up to 5,000 yuan.