China's Merchants Win Fee Battle

Interchange fees in China have remained at a level lower than many developed markets, especially the United States. Chinese regulators and the government is driving those fees lower. On average, regulators will decrease the fees about 25 percent. This comes after complaints from restaurants and retailers that merchant fees cut into their already thin margins.

From the Payment Law Advisor blog:

Fees will vary by sector – entertainment; general; daily living; and public welfare. For the entertainment sector, including food and beverage, entertainment, jewelry, artworks, real estate and automobile sales, fees will fall from 2% to 1.25%, including a 0.9% for issuance service fee, a 0.13% clearing house online service fee, and a 0.22% (+/- 10%) transaction fee. Note that in the aggregate these decreases exceed the basic one-fourth decrease.

The reduction is lower than what merchants had hoped for and what was initially proposed initially. The new fees still don’t distinguish between credit and debit cards.

Mercator Advisory Group’s latest China report has an in-depth discussion of the developments in China over the past year.

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