CHINA yesterday started to reduce bank card fees for retail merchants, saving them over US$1 billion, a move Chinese central bank said will benefit retailers and consumers but hit banks' intermediate business.
"Based on the amount of purchases paid by bank cards in 2012, the adjustment could reduce more than 7.5 billion yuan (US$1.2 billion) of merchants' annual fees, a drop of over 20 percent, which alleviates their cost burden and promotes business development," the People's Bank of China said in a statement yesterday.
The fees will be cut by 37.5 percent for restaurants and entertainment service providers, the biggest among all industries. The fees for other sectors will be reduced by 22 percent to 24 percent.
There were 3.5 billion bank cards in circulation issued by 338 banks by the end of last year. Card penetration measured by card payments over total retail sales of consumer goods reached 43.5 percent, according to the PBOC.
"Fee incomes at the commercial banks and China UnionPay will be reduced over time, which exerts financial pressure on their card business. However in the long run, the adjustment will elevate bank card issuance and card penetration, and bring new opportunities to the bank card industry," the PBOC said.
The PBOC cut the fees in a bid to boost the willingness of merchants to accept bank card payments as China strives to trim reliance on trade, hit by weak demand following the global financial crisis, and shift toward domestic consumption to power the world's second-biggest economy.
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