Apr 26, 2006

China considering tax incentives to boost card usage

Shanghai Daily reports that China is considering tax incentives to encourage merchants to buy POS terminals, and at the same time plans to "strengthen tax checks" for merchants with a large volume of sales that do not accept bank cards. The dual pronged approach is intended to help the government collect taxes easier by moving people away from cash.

If the plan goes into effect, it would very likely lead to faster deployment of terminals in China. However, merchants could still encourage cash and discourage cards by adding a surcharge for card payments or providing a discount on cash transactions, as they do in many other parts of the world. They could justify this by arguing that the cost of payment is too high, whatever that cost might be.

A more powerful incentive to get merchants in China to encourage card usage would be to show them how payment cards can help them boost their business. The government has done this before by adding a scratch off game section to pre-printed receipts, to encourage customers to request the receipt. See my prior post on pre-printed receipts in China and a similar card based game which helps merchants boost their business.

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