Chinese tourists payments: Cash, Union Pay and associated heartaches

Chinese tourists payments: Cash, Union Pay and associated heartaches

You only need to take a quick walk down 5th Avenue or Rodeo drive to notice how many luxury boutiques have the China Union Pay placard prominently displayed in the window. With the velocity and size of purchases by Chinese tourists, it’s no wonder why.

Due to both the Chinese government’s restriction of the banking industry in China and difficulties with RMB convertibility, China Union Pay credit cards are essentially the only credit cards that Chinese consumers can use in the United States. China Union Pay is offered via the Discover network, but requires a special subscription from Discover. You can also work directly with China Union Pay to install a dedicated terminal. Harrods did this, and saw an immediate 40% increase in sales to Chinese tourists.

Without China Union Pay, the only other payment option for Chinese tourists is cash. Given ATM withdrawal limits and the need to fill out IRS forms for transactions greater than $10,000 (a tough proposition for many uber-private Chinese millionaires), cash transactions can limit consumer spend. Once you have succeeded in attracting the consumer to your store, payment becomes one of the most crucial issues in customer conversion and raising average transaction value.

Below are some tactical tips for handling payment with Chinese consumers

- Prominently display your China Union Pay placard so there are no questions Understand how China Union Pay pin codes work. In China, consumers are required to use a pin code in order to complete a transaction. In most other countries, there is no need for a pin code, and many stores can not accept credit cards that require a pin code. Chinese consumers can request that China Union Pay deactivate their pin code, but many consumers don’t know to do this before they leave China. Make sure you have a troubleshooting plan in place to handle these situations and other problems that may arise from the use of China Union Pay credit cards.

- Clarify is there is a spending limit on your China Union Pay service. We have heard that most retail locations have spending limits with both service through China Union Pay and Discover services.


- Be aware of the time of day that China Union Pay is open in your market. Consumers may wait until their banks or China Union Pay is open in order to purchase, as there is a higher level of comfort that they can call with questions or problems. Make sure your store is staffed appropriately during these hours.


- Know the $10,000 cash limit and make sure you have options for those who only want to spend $9,999.


- What is your plan for handling a consumer who wants to pay in RMB cash? Do you turn them away? Walk them to the bank? What happens when you have to negotiate currency exchange rates? Have a standard plan for each store and train salespeople to follow the plan.


Planning ahead won’t solve all of your payment problems, but it will certainly result in reducing friction.

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