China's bank card industry will take a giant leap forward following
the announcement Tuesday that a unified national payment system is
to be introduced.
The system, to be fully operational by 2005, will allow bank card
holders to use their cards at any terminal, no matter at which bank
or which city they keep their accounts.
With an all-Chinese shareholder structure and a registered capital
of 1.65 billion yuan (US$198.8 million), China UnionPay Co., Ltd.
will link all bank's payment systems throughout the country, and
tag its brand on all the bank cards and automatic teller machines
(ATM) and points of sales (POS).
The first 85 shareholders include the big four state-owned
commercial banks, 10 shareholding banks, 45 city commercial banks
and 12 rural credit unions.
Since January 10, China UnionPay bank card users in Beijing,
Shanghai, Guangzhou, Hangzhou and Shenzhen have been able to use
any ATM or POS thanks to China UnionPay.
By
the end of the year, China UnionPay will link up ATM and POS
machines in 100 cities and build up a cross-region and
cross-banking network in 40 major cities, said Dai Xianglong,
governor of the People's
Bank of China, at China UnionPay's opening ceremony in Shanghai
Tuesday.
The national universal payment system is expected to be fully
operational by 2005.
China UnionPay was established on the back of the nation's
nine-year-old "Golden Card" project, which has set up bank card
network service centers in 18 cities and a national bank card
information switch center.
Before that, card holders could only use the card in the same city
with the same bank where they opened their accounts.
Since 1987, China has issued more than 383 million bank cards. The
transaction volume reached 8.43 trillion yuan (US$1.02 trillion)
last year, including 92 billion inter-bank transactions.
However, the absence of a nationwide efficient, universal and
secure payment network accessible to all bank card users hinders
the development of China's bank card industry.
Only 1 percent of all consumption volume was conducted via bank
cards.
Analysts say China UnionPay will improve the country's bank card
acceptance environment, and, therefore, promote the development of
the industry.
Taking into consideration China's entry into the World Trade Organization and the
hosting of the 2008 Olympic Games, analysts see a rosy future in
China's bank card business.
"We expect trade volume to double on a year-by-year base in the
first few years and increase 50 percent each year after that," said
China UnionPay's Executive Vice-President Li Ling.
Foreign banks and payment companies are eager to tap China's
market, the potential second largest market for credit cards.
Some aggressive players, such as the Hongkong and Shanghai Banking
Corporation (HSBC) and Citibank, have already linked
up Chinese banks' ATM network in cities such as Shanghai. However,
all the foreign players are excluded in the China UnionPay
system.
"We are always expecting to utilize a unified payment network in
China," said Stanley Wong, chief executive of Standard Chartered
Bank China business. "If China UnionPay serves well as this
role, we would be very interested to be part of it, either as a
shareholder or a member."
He
was echoed by HSBC's spokeswoman Dandan Chang, whose bank linked up
Shanghai's ATM network last year.
"We are waiting for the detailed provisions concerning foreign
banks' credit card service in China and looking forward to enabling
our customers to use their cards in any place in the country," she
said.
China UnionPay's officials said when and how foreign financial
institutions can join the system has not been decided yet. However,
they said they are in close cooperation with international credit
card organizations, such as
Visa and MasterCard.
(China
Daily March 27, 2002)