This article just out on the Wall Street Journal shows how Han Chinese Rats overseas PAY THEMSELVES! rather than the merchants from the country they purchase.
Nepal’s central bank dealt a blow to Chinese mobile-payment giantsthat have been aggressively expanding abroad, restricting the use of these platforms after finding that some transactions they facilitated in the small Himalayan nation flouted its laws.
Earlier this week, Nepal Rastra Bank, the central bank and banking regulator, issued a terse notice saying certain types of foreign-payment transactions were illegal, and offenders could be prosecuted under the country’s foreign-exchange laws.
A spokesman for the central bank said Wednesday it has banned people and businesses from making and accepting payments using Alipay and WeChatTCEHY -0.88%Pay that aren’t routed through a domestic bank.
Hundreds of millions of Chinese citizens use Alipay and WeChatTCEHY -0.88%Pay apps on their mobile phones to make purchases online and in stores. Alipay is operated by Ant Financial Services Group, an affiliate of e-commerce giant Alibaba Group HoldingLtd. , while WeChat Pay is owned by Tencent HoldingsLtd. Outside China, both payment platforms have set up point-of-sale systems in countries frequented by Chinese tourists including the U.S., Southeast Asia and parts of Europe.
Nepal, a mountainous country that borders China and India, is a major destination for Chinese tourists, many of whom have been using Alipay or WeChat Pay to make purchases at stores.
Nepalese regulators have flagged how some of those transactions work in practice. Most Alipay and WeChat Pay users have connected their Chinese bank accounts directly to their virtual wallets, drawing on their funds in China when they need to make payments. Some Chinese owners of Nepalese businesses have similarly connected their bank accounts in China to Alipay and WeChat Pay.
Nepalese regulators said they believe many Chinese shoppers in Nepal have been using the platforms to make payments in yuan, rather than in the local currency. That means money Chinese tourists are spending is moving only within China’s financial system and bypassing Nepal’s banking system to the detriment of its economy, according to Laxmi Prapanna Niroula, a spokesman for the country’s central bank.
Alipay and WeChat Pay customers have been able to do this by using on their mobile phones quick-response, or QR, codes—a type of bar code—that are meant for yuan-denominated transactions in China. That also allows them to avoid foreign-exchange transaction fees for payments made in Nepalese rupees.
Any transactions using these payment platforms that aren’t covered by registration with Nepal’s central bank, either directly or through a local partner, are banned, Mr. Niroula said. Individuals or businesses who engage in such transactions would be subject to punishment under local law, he said.
Representatives for Ant and Tencent said any effectively domestic payments made outside China violate the platforms’ terms of service.
A spokeswoman from Ant said the company “strictly complies with local rules and regulations” and has taken measures to prevent any recurrence of “wrongfully collected payments outside of China using domestic QR codes.”
In a separate statement, Ant said Alipay has a partnership with a licensed Nepalese partner, Himalayan Bank Ltd., which settles local currency transactions by Alipay users. Dozens of merchants—including restaurants, souvenir shops and hotels in Nepal’s capital, Kathmandu, and other cities—have been accepting Alipay payments since early 2019, the company said.
Tencent said that WeChat Pay hasn’t officially entered Nepal, and that its cross-border business “strictly abides” by relevant local laws and regulations. It also said it has made efforts to clamp down on unauthorized payments abroad.
It isn’t known how much transaction volume from Chinese tourists bypasses Nepal’s banking system, Mr. Niroula said. More than 153,000 Chinese tourists visited Nepal in the past year, according to official statistics, second only to tourist arrivals from India.
In 2018, overall travel and tourism contributed around 7.8% to Nepal’s gross domestic product, with international visitors spending some $746 million in the country, according to the World Travel & Tourism Council, a London-based industry body.
Kshetra Bahadur Basnet, who has worked as a tour guide in Kathmandu for eight years and speaks Mandarin, said the local authorities’ action could hurt tourism. He said more Chinese business owners have set up shop in Nepal in recent years and mobile payments are a popular way for Chinese travelers to spend.
“Most of the Chinese tourists aren’t used to carrying cash and prefer to use Alipay or WeChat Pay anywhere they go,” said Mr. Basnet.