News

Chinese retailers unhappy over interchange

May 24, 2004

GUANGZHOU, China - American retailers aren't the only ones unhappy about interchange fees paid to card issuers.

According to a report in The Standard, Guangzhou retailers have begun charging customers fees equivalent to those they pay to China UnionPay, the electronic interbank network that manages 400 million credit cards and bank cards.

The action is a further escalation of a dispute over the network's charges, which began when nearly 50 retail chains in Shenzhen threatened a card boycott earlier this month. Shenzhen and Guangzhou retailers want UnionPay to reduce or abolish the charges.

Talks between the two sides deadlocked late last week.

"This was because UnionPay and the banks refused to lower the charges for credit and debit card transactions,' a retailers' spokesman told the Standard.

A group of Guangzhou shop and store owners are offering customers discounts equivalent to the card charge if they pay in cash. Those who still want to pay by card will be charged the UnionPay levy.

"We hope we won't need to take this measure as this not only causes inconvenience to customers, but also hinders the development of the card bank market," said a spokesman for Shenzhen retailers. "We believe the government could help us resolve the issue by introducing a competition mechanism and allow private firms to enter the city's bank card market. Boycotting bank cards is our last resort.'