UnionPay, Third-Party Clearinghouse Clash in China’s Race to Go Cashless
The boundary between China’s two cashless-payment clearing systems is not as well-defined as it seems.
When a shopper pays with a bank card, the transaction is cleared directly through China UnionPay, which settles the payment between the merchant and the card-issuing bank.
But when the shopper pays through a nonbank platform — a so-called third-party payment service provider such as Alipay or WeChat Pay — the transaction will be cleared through a central bank-administered clearinghouse, which settles the payment between the merchant and the platform to which the shopper’s commercial bank account is linked.
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