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Breaking of bankcard monopoly brings benefits

Updated: Sep 9,2016 9:27 AM     China Daily

The People’s Bank of China, the country’s central bank, cut the commission charges and fees for bank cards on Sept 6. commented on Sept 7:

Under the new policy, first announced in March, banks are not allowed to charge more than 0.35 percent of a transaction amount for debit cards, while credit card transactions should not involve a handling fee exceeding 0.45 percent of the transaction amount.

For a long time, different commission charges have been levied by banks on card use. On the one hand, this has increased the costs for companies in the entertainment and catering industries. On the other hand, bankcard transactions involving large amounts of money normally have a cap for commission charges. As a result, some companies have sought to register in other industries that enjoy relatively low fares, in a bid to bypass the charges they should have paid.

Another highlight of the latest move by the central bank is lower annual fees, which will hopefully result in a 7.4 billion yuan ($1.14 billion) cut in the annual fees companies pay each year.

That China can afford to further slash its commission charges and fees has a lot to do with internet-based innovations. Paying with a card only became popular among Chinese customers in recent years, and most of such payments are made online, which is much safer compared to traditional offline credit-card payments.

Besides, the emergence of third-party online payment platforms, such as Alipay and WeChat, has broken the monopoly of China UnionPay as the sole bankcard operator in the country.