Beneath the headlines of reimbursement mandates and shiny card-network APIs sits a quieter, structural shift: payments are retreating to home turf.
China is pressing exporters to settle 40% of invoices in renminbi rather than dollars; Thailand and India are welding their domestic QR systems together; Brussels is sharpening its knife for Visa/Mastercard’s cross-border fees; Shopify is giving British merchants a pay-by-bank button that never leaves the U.K.’s Faster Payments rail. Each story is different, yet they rhyme: value is being routed onto local or purpose-built networks that promise lower cost, tighter compliance and political insulation.
This newsletter follows that thread—how regulators, merchants and even card schemes themselves are repositioning for a world where the dominant question is no longer “Visa or Mastercard?” but “Whose rail, whose rules, and whose currency?”.
1 | Headlines
- Beijing widens the yuan net. The PBOC lifted the minimum share of export invoices that banks must settle in renminbi from 25% to 40%. The carrot? Cheaper CIPS credit lines for lenders that exceed the target. So what? Even a single-digit shift of China’s US $3 trn export machine into RMB cuts dollar demand and gifts Chinese banks fresh correspondent-fee revenue.
- UK rolls out mandatory APP-fraud pay-backs. The Payment Systems Regulator’s new policy statement (PS25/5) confirms that, from 7 Oct 2025, Faster Payments banks must reimburse scam victims, with costs split 50 / 50 between sending and receiving PSPs. So what? Fraud losses will be socialised across the whole network, handing acquirers a huge incentive to police mule accounts—and giving other jurisdictions a ready-made template.
- Mastercard courts Main Street. The card giant launched Small Business Navigator, bundling an AI fraud-cop, tap-on-phone acceptance and free data from the Mastercard Economics Institute. So what? Visa has long owned the SMB love-fest; Navigator is Mastercard’s play to lock merchants into its rails before surging FedNow and pay-by-bank offerings nibble at SME card volume.
- Africa eyes a trillion-dollar corridor. A new Oui Capital report pegs the continent’s cross-border-payment market at US $329 bn today—on course to hit US $1 trn by 2035 thanks to mobile wallets and PAPSS. So what? A tripling of flows would slash dollar clearing fees and hand African central banks real leverage in global FX.
- The remittance tax that won’t die. Washington’s latest all-in-one tax bill carries a 3.5% levy on money transfers by non-citizens. So what? Adding US $6 to a US $200 remittance would flip many migrants to hawala-style cash networks—hurting AML visibility and the US$ 160 bn Latin-American corridors the hardest.
2 | Deep dive: Beijing’s RMB play—can a 40 % rule move the dollar?
China’s exporters still bill nearly three-quarters of shipments in dollars—legacy inertia that hands US banks fat correspondent fees and gives Washington tariff leverage. Last Wednesday, the PBOC turned the screws: state banks must now clear at least 40% of their trade book in yuan, up from 25%. The sweetener is dirt-cheap liquidity via CIPS; the stick is tougher FX-risk capital rules for laggards.
Why it matters
- Dollar drainage. Shifting just 5% of China’s exports (≈ US $150 bn) into RMB dumps US $150 bn of annual demand—enough to jolt funding spreads in frontier markets that live on greenbacks.
- Fee migration. Every RMB invoice steers payments off SWIFT toward CIPS, whose per-transaction cost is a fraction of New York-cleared wires—revenues that formerly landed with global correspondent banks now ring-fence inside China.
- Commodity shockwaves. Copper and steel traders are already quoting dual currency terms. If iron-ore shipments swing, Australia’s miners could wake to RMB-denominated order books, forcing treasury desks to rethink hedging playbooks.
- FX-hedge tech arms race. Global PSPs eyeing China trade (Adyen, Stripe) must bolt on low-cost CIPS gateways or watch volume evaporate to domestic rivals armed with on-shore RMB liquidity.
What could trip it up
- Liquidity deserts outside Asia. Importers from Africa to South America still struggle to source RMB on demand; a rapid dollar-to-yuan flip risks settlement delays unless offshore pools deepen.
- Political blow-back. Washington can weaponise tariff rounds or secondary sanctions to discourage RMB settlement, pushing multinationals to play it safe with dollars.
Bottom line: the 40% rule won’t dethrone the dollar overnight, but it weaponises invoices—turning every export contract into a micro-battle in the wider currency war.
3 | Word of the week: Alias Directory
What it means
An alias directory lets users send money to “JohnDoe@bank” or a mobile number instead of a 15-digit IBAN. The directory maps that friendly handle to the real account behind the scenes.
Why payments folk care
- Makes instant rails sticky—nobody remembers an IBAN at the checkout.
- Slashes mis-directed payments: the directory can preview the recipient’s name before you hit send (India’s new UPI rule borrows this trick).
- Hot area for fraud—synthetic IDs love an alias, so strong KYC at registration is gold dust.
4 | Payment fact of the week
How a dingy Hangzhou tea-shop birthed QR-code dominance
Walk back to July 2011, when Hangzhou still ran on cash and the nearest point-of-sale terminal cost more than a month’s rent. A young Alipay evangelist ducked into Lao Yu’s two-metre-wide teashop and printed a black-and-white square on ordinary paper. Yu stuck the square to his till, opened an Android app and—when the next student ordered oolong—scanned the customer’s wallet code. The ¥6 payment landed instantly in Yu’s account. No mag-stripe reader, no settlement delay, no 1.5% swipe fee—just a camera, a data connection and a bitmap that anyone could copy for free. In that scruffy moment, QR-code pull-payments were born.
Traditional cards had always brought hidden baggage: plastic blanks, embossers, PCI audits, chargeback paperwork, and hardware that froze in China’s humid alleys. Even when UnionPay pushed terminals into tier-one cities, street stalls balked at the monthly rental and the two-day wait for funds. Alipay’s square of pixels vaporised the whole stack. Phone cameras were already everywhere; merchants paid zero to print a code and the 0.38% fee the People’s Bank later enshrined looked charitable next to global interchange. For shoppers, typing a PIN on someone else’s keypad suddenly felt medieval when a quick scan did the job.
The network effects came fast. Within twelve months, a million micro-merchants from tea stalls to Sichuan buskers were taping up static codes; by 2016 China’s mobile-payment volume hit US $5.5 trillion, dwarfing every card rail on the planet. scmp.com Regulators pivoted from panic to embrace, minting “Technical Standard 10-10-2” in 2016 to formalise dynamic codes and cap fees—cementing the square as national plumbing. Today QR handles around ¥45 trillion (US $6.2 trillion) a year in China, powers metro gates in 285 cities, and has been cloned into BHIM in India, SGQR in Singapore and the ASEAN pay-link projects now stitching the region together.
What began as a hacked sticker in a steamy shop solved the two great frictions of cards—hardware cost and settlement lag—and proved that payments could piggy-back the smartphone, not the other way around. Every time you scan a café placard in Bangkok or a museum code in Paris, you’re replaying that Hangzhou experiment, swapping plastic friction for pixel-speed trust.