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Credit Gains Popularity in China
As Chinese consumers grow more accustomed to using plastic payment when shopping, the number of credit cards is expected to greatly expand in China even this year, representatives from the global payment organization Visa International predicted.
The People's Bank of China has predicted that the number of credit cards on the Chinese mainland will hit 200 million by 2003, but Visa is even more optimistic.
"We expect that, by the end of this year, the number will hit 200 million," said Albert Shiung, Visa's chief representative in China.
By the end of 1999, Visa's Chinese member banks had issued more than 50 million cards on the Chinese mainland, a surge of 70 per cent from the previous year.
Analysts said that as card-related services keep improving with governmental efforts to connect issuer banks, and more credit cards become available with the central bank's loosened controls, the use of bank cards in China would strongly increase.
Although the number of bank cards issued by China's commercial banks has soared to more than 100 million, the new payment method is still playing an insignificant role in private spending in China at less than 1 per cent, Shiung said.
Shiung said Visa would step up the issuance of Visa-brand cards in China this year, provide more technical options to its member banks and clients and help them issue true credit cards.
Two Chinese banks have issued credit cards that give credit without deposits on the card and an interest-free repayment period. "And you'll soon see more banks issuing true credit cards," he said.
Analysts said widespread availability of consumer credit, which could be enabled by credit cards, would make the economy less reliant on exports and more competitive.
Promoting the use of chip cards is high on Visa's agenda this year, Shiung said. Five local banks in Shanghai, all Visa members, introduced China's first international standard bank card, or Yikatong Cards, in December, 1999.
Although a consistent technical assistant to the development of China's bank card industry, Shiung warned that a lack of expertise in providing personal credit would undermine competitiveness of Chinese banks after the country's expected entry to the World Trade Organization.
"The difference (between domestic banks and foreign rivals) is not the use of technology, but lack of experience in personal credit businesses," he said.
Shiung predicted the competition would be more intense in the credit card sector instead of debit cards, which rely more on a widespread retailing network that foreign banks lack.
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