Get through ‘reverse digital divide’
The new mobile payment represented by barcode payment has become the mainstream payment tool in China. However, in most countries around the world, especially in some developed economies, bank cards are still the mainstream payment tool.
In recent years, with the rapid development of informatization and digitization in China, the popularity of mobile payment has increased rapidly. Now, the popularity of digital payment in China may be twice as high as in other countries. And everyone in the country is very accustomed to using a mobile phone for all aspects of life. However, this has made China too “digitized” to be “out of touch” internationally. Some people say that this has created a “reverse digital divide” between China and foreign countries.
One main difficulty for foreigners in making mobile payments lies in the low success rate of overseas individuals using Alipay and WeChat to link overseas bank cards, as well as payment limits.
When overseas users enter China and want to link a third-party payment app, they need to provide real-name information. Some overseas users may be unwilling to provide their personal information for personal privacy concerns. In addition, the transmission of cross-border information is a long-standing difficult issue even in the traditional financial area due to different principles and rules in various countries in the issue.
Aside from mobile payment, foreigners were also reported to encounter obstacles in using cash and international cards in China. A typical example of this is foreigners like Jim who had difficulties in hailing and making payments in taxis in China, as due to the popularization of online payment, most Chinese taxi drivers receive orders on car-hailing apps and present a QR code to passengers to effect payment. Fewer and fewer of them handle cash, not to mention POS devices.
“Taxis are often the first local service that overseas business people and tourists come into contact with after arriving, and it is also one of their main ways of getting around the city. However, payment difficulties are particularly prominent in taxis,” Yang Guoping, chairman of the Shanghai Dazhong Transportation Group and a representative to the 14th National People’s Congress, told China Business Journal.
High transaction fees are also another obstacle. The single transaction fee for foreign card payments is basically between 2.5 percent to 3.5 percent, with VISA and MasterCard having a single transaction fee of around 3 percent, while the single transaction fee for domestic cards is around 0.6 percent, and mobile payment fees are even lower, with Alipay at 0.38 percent, according to a report published by yicai.com
Many domestic merchants are not willing to pay high cross-border credit card transaction fees, but rather encourage foreign tourists to use cash, Alipay, or WeChat Pay, according to the report.