As part of an effort to increase retailer acceptance of bank cards, the People’s Bank of China announced on Monday that it would cut bank card fees for merchants, resulting in $1 billion in retailer savings.
“Based on the amount of purchases paid by bank cards in 2012, the adjustment could reduce more than $1.2 billion of merchants’ annual fees, a drop of over 20 percent, which alleviates their cost burden and promotes business development,” China’s central bank said, according to Shanghai Daily.
Fees for restaurants and entertainment providers, the largest among all industries, will be reduced by 37.5 percent, while fees for other areas will be cut by between 22 and 24 percent.
By the end of last year, there were 3.5 billion bank cards in circulation, and the central bank said that card penetration, which is measured by examining card payments in retail sales, reached 43.5 percent.
“Fee incomes at the commercial banks and China UnionPay will be reduced over time, which exerts financial pressure on their card business,” the central bank said, Shanghai Daily reports. “However in the long run, the adjustment will elevate bank card issuance and card penetration and bring new opportunities to the bank card industry.”