“The work to reform the hardware and software needed to support foreign bank card payments should speed up, and the possibility of developing touchless payment methods should be explored,” the State Council document said following a policy briefing on optimising payment methods last week.

“Bank card clearing institutions would be urged to be in line with international payment platforms.”

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The document also vowed to impose greater punishments on shops that reject cash and also offer more foreign currency exchange and cash services to ensure “a seamless connection” between local and foreign payment markets.

Banks and payment institutions were also requested to make the process of opening an account easier.

Following the release of the State Council document, the top players in China’s digital payment market, including Alipay, WeChat Pay and UnionPay, issued statements vowing to improve services in accordance with the guidelines.

But Joe Mazur, senior analyst at Beijing-based consulting firm Trivium China, said the approach was part of efforts by Chinese policymakers to give “easy but marginal wins to foreign business in lieu of addressing their main concerns”.

We welcome further steps in addressing remaining challenges like differences in payment practices and the legal environment

Raffa Vincenzo

“Easier payments for foreigners could help at the margins, but it doesn’t address the main concerns that foreign investors have about China, including the lacklustre economic recovery and worries about personal security,” Mazur said.

Raffa Vincenzo, vice-president of the Italy-China Association of Business, described the document as a “positive step”, but also said more work was needed.

“At the same time, we welcome further steps in addressing remaining challenges like differences in payment practices and the legal environment to build a fair and sustainable environment for all,” he said.

Beijing has vowed to remove more financial barriers for foreigners and improve access for overseas firms in its financial market against a backdrop of challenges in enticing tourists and foreign investment after it relaxed its coronavirus controls last year.

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China has long limited the use of foreign bank cards due to Beijing’s rigid financial and data controls.

While its mobile-payment penetration rate has reached 86 per cent domestically, according to the state-backed Xinhua News Agency, non-mobile users and foreigners who were unable to use payment methods such as Alipay and WeChat Pay without a local bank account still face hurdles.

Mobile devices are used to pay for everything in China, ranging from food delivery to holidays.

And many businesses no longer keep change for cash transactions despite only slightly over 64 per cent of internet users aged over 50 in China having used mobile payment services, data firm Statista said in January last year.

The People’s Bank of China and various ministries have established working groups to make payment easier for foreigners.

In July, WeChat Pay and Alipay, which dominate China’s retail payment market with transactions worth 348 trillion yuan (US$48.4 trillion) in 2022, enabled overseas tourists to link their credit and debit cards issued by Visa, Mastercard and other major international operators.
China also approved the Chinese joint venture of American payment firm Mastercard to conduct yuan clearing operations and issue yuan-denominated bank cards in November, making it the second overseas bank card clearing institution approved after American Express in 2020.