China Looks Set to Relax Rules on Foreign Credit Cards

The World Trade Organisation (WTO) has ruled that China must stop discriminating against foreign credit card companies. This is good news for expats living in China, and should mean that in future they will be able to use their Visa, Mastercard and Amex cards.

At the moment, the only payment card scheme permitted in China is called UnionPay.  You probably have never even heard of it, but, thanks to its state-backed monopoly inside China, in fact UnionPay is the largest payment scheme in the whole world!

Until now any transactions in the Chinese Yuan currency have been forced to use the UnionPay network. Foreign cards are allowed in China, but they must use the UnionPay network and to carry their logo on their cards.

The ruling, made in July 2012, dates back to a complaint filed against China by the USA a couple of years ago. Back in September 2010, the USA requested consultations with China regarding

 certain restrictions and requirements maintained by China pertaining to electronic payment services for payment card transactions and the suppliers of those services.

UnionPay Logo

The USA alleged that these restrictions were counter to the WTO’s  General Agreement on Trade in Services (GATS) of 1995.

The WYO’s findings confirm that China has been acting inconsistently with its commitment, under the GATS agreement, to maintain a fair  system for international trade.

In spite of China’s enviable financial growth and booming economy, credit card use in China remains very low.  Although it is good news for foreigners, it may be a while before the WTO’s ruling has any impact on the average Chinese consumer, who is sticking with cash as his preferred payment method.

A note about the World Trade Organisation

From the WTO’s own website:

The World Trade Organization (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

Details of the Case

http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds413_e.htm