Q: Recent media reports say that China UnionPay will adopt a policy to impose a limit of USD 5,000 per transaction on overseas insurance merchants. Could you give us more details?

A: The SAFE and China UnionPay do not change the policy on the use of bank cards with overseas insurance merchants.

According to the Circular of the State Administration of Foreign Exchange on Issuing Merchant Category Codes for Prohibited and Restricted Use of Bank Cards Overseas (Huihan No. 19 [2004]) and the Circular of the State Administration of Foreign Exchange on Regulating the Management of Foreign-Currency Bank Cards (Huifa No. 53 [2010], the document updated and repealed the document of Huihan No. 19 [2004]), four merchant category codes (MCC) involve overseas insurance merchants. These merchants provide insurances under the current account that involves travel consumption, such as accident and illness insurances, and life insurance under the capital account that is of investment nature. Considering that domestic cardholders have the requirement for buying micro-insurance on their overseas trips or during their business communication, the SAFE defines insurance merchants as those allowed to accept a limited amount of payments by bank cards, while implementing the policy of the current account convertibility under bank cards. The amount per transaction between cardholders and such merchants should be no more than USD 5,000 or the equivalent, which can meet the reasonable requirements for buying micro-insurance and restrict investment insurance that involves the capital account.

China UnionPay recently investigated overseas acquirers and found that some insurance merchants did not use the MCCs that are for merchants allowed to accept a limited amount of payments by bank cards and correspond to the industry codes, and required these acquirers to regulate the logo and use of MCCs to ensure the implementation results of regulatory policy and business rules.

The SAFE has long supported and will continue to support cross-border use of bank cards to pay for normal travel consumption that is in compliance with regulations to facilitate international communication, and will not change the policy of buying foreign exchange domestically to pay for overseas consumption.

Note: Merchant category code (MCC) is a code assigned to businesses based on their main business scope and industry classification.

Q: Can domestic bank cards with logos of international card organizations such as VISA and MASTER be used with overseas insurance merchants?

A: Both domestic bank cards with logos of international card organizations such as VISA and MASTER and of China UnionPay can be used with overseas insurance merchants. The SAFE has recently required the issuing banks of the domestic bank cards with logos of international card organizations such as VISA and MASTER to implement the regulations on merchants that are allowed to accept a limited amount of payments by bank cards in accordance with the compliance and authenticity requirements.

Q: Can domestic cardholders evade the limit of USD 5,000 or the equivalent per transaction by swiping cards many times?

A: Domestic cardholders are allowed to use their bank cards to pay for normal and reasonable insurance requirements involved in overseas trips and business communication. Given that cardholders may swipe cards many times to pay for insurance transactions for other purposes, the SAFE will work with bank card organizations and issuing banks to rigorously monitor cardholders and merchants suspected of getting involved in transactions paid for by swiping the cards many times, based on the records of bank card transactions.