Merchants domiciled outside of China can accept CUP cards through their acquirers. UnionPay International (UPI) offers interchange rates to acquirers based on country, MCC, card product, and sales channel (e.g. retail, ecom). Interchange rates range from 0.20% to 1.50% and network service fees range from 0.05% to 0.20%. Large, multinational merchants can negotiate custom rates directly with UPI and have those custom rates implemented through their acquirers. It is important to note that the rates offered by UPI are not subject to the NDRC interchange regulations because these transactions are acquired outside of China.

In the U.S., UPI has a relationship with Discover so that all CUP cards are processed through the Discover network. So, if as a merchant, you accept Discover cards, you automatically accept CUP cards. CUP credit cards are processed through the Discover credit rails and CUP debit cards are processed through the PULSE debit rails. These transactions are subject to Discover international interchange rates and cross-border fees. However, some acquirers like Elavon and Adyen have directly connected to UPI and can process CUP cards without involving Discover. This direct integration capability allows these acquirers to offer lower rates for CUP cards than Discover.

Alipay and WeChat Pay have aggressively been growing outside of China. They are catering to the 140 million annual outbound Chinese tourists going to Southeast Asia, Europe, and the Americas. Currently, these mobile wallets are accepted in about 50 countries and primarily in travel, hospitality, retail, and luxury goods verticals. To date, both Alipay and WeChat Pay tend to offer similar rate structures outside of China as they offer in China. This is in contrast to “onshore” and “offshore” rates with CUP.  This dynamic has created a near term pricing competitive advantage for the mobile wallets.

As you can see, Chinese payment methods are evolving rapidly and mobile wallets are leading the world in contactless, frictionless, low-cost, and low-risk payments. Ensuring that you negotiate, setup, and configure your payments environment in the Chinese market or serving Chinese customers outside of China could not only save a significant amount in fees but could also drive top-line revenue.

If you missed the first blog about domestic payments in China, see

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