The Cards and Payments Industry in China: Emerging Trends and Opportunities to 2020

Although China is Asia’s largest payment cards market in terms of transactional value and volume, cash is still a popular payment instrument among consumers, especially in rural areas. This is primarily due to a lack of knowledge of payment cards, or little or no access to banking infrastructure. As the government and banks began to provide basic financial access to the unbanked population, by expanding banking infrastructure, launching new branches and making efforts to change consumer payment habits, payment cards gradually became more accepted.

According to the World Bank, the percentage of the Chinese population aged 15 or above with a bank account has been steadily increasing. To speed up the provision of financial and banking services to the unbanked population, the CBRC granted a license to the two private banks in 2014. These initiatives, along with changing lifestyles, a rise in the economically active population and disposable income, as well as the growing popularity of online shopping, the increased acceptance of cards at retail outlets and the adoption of contactless technology have supported the growth in electronic payments since beginning of the decade. This trend is anticipated to continue over the forecast period.

Cash continues to dominate the Chinese cards and payments industry in terms of transaction volume. One of the primary reasons for cash dominance is a consumer preference to keep track of their day-to-day spending. In terms of transaction value, however, cash is gradually decreasing as consumers are using payment cards at POS terminals, especially for low-value transactions.

Payment cards are gaining popularity among Chinese consumers. Banks offer debit and credit cards, with credit cards having a maximum interest-free credit period of up to 56 days. Banks also offer an installment facility to credit cardholders with flexible repayment options Debit cards are targeted at different consumer segments, accompanied with a range of value-added services. Consequently, the industry share of payment cards in terms of transaction value and volumes increased during the review period – a trend which is anticipated to continue over the forecast period.

Scope

• Detailed insights into payment instruments including check payments, credit transfers, payment cards and cash transactions

• E-commerce market analysis

• A detailed analysis of strategies adopted by banks and other institutions to market debit, credit and charge cards in the Chinese market

• An analysis of the different demographic, economic, infrastructural and business drivers affecting China's cards and payments industry

• An outline of the current regulatory framework in the Chinese cards and payments industry

• Profiles of major players in China's cards and payments industry

• Current values for the Chinese cards and payments industry for 2015, and forecast figures up to 2020

Key Highlights

What important legislation affecting card transactions is the People's Bank of China – the country’s central bank – currently contemplating? What will implementation of this legislation mean for merchants? How will card issuers be affected? What is likely to be the impact on consumers? When is this new policy anticipated to take effect?

What is anticipated to accelerate a shift towards electronic payments in China? Why is establishing WeBank a stepping stone in this process? Which two banks followed WeBank into the Chinese market with similar propositions?

What are the key factors behind accelerating the uptake of alternative payments among Chinese consumers? Which companies are involved in collaborations in the industry that are developing m-payment services? Which two major global players have responded to these developments with new alliances? What impact are these partnerships likely to have on China’s alternative payments market?

Reasons to buy

• Apply GlobalData’s historic and forecast market data to make more informed business decisions in each sector of China's cards and payments industry

• Investigate the key market trends and growth opportunities and identify those which best suit your expansion strategy

• Assess the competitive dynamics of China's cards and payments industry; ensure your value proposition gives you a competitive advantage

• Analyze the strategies adopted by banks for delivering various payment instruments in China and emulate those which could provide you the best opportunity to grow your market share

• Identify the key regulations governing China's cards and payments industry and address any compliance issues that might impact your revenue growth

Companies mentioned

ABC

ICBC

CCB

BOC

BoCom

CMB

CEB

SPD Bank

CMBC

Hua Xia Bank

CGB

China UnionPay

Table of Contents

1 Definitions and Methodology

1.1 Definitions

1.2 Methodology

2 Key Facts and Events

3 Executive Summary

4 Payment Instruments

4.1 Current Payment Environment

5 E-Commerce

5.1 E-Commerce Market Analysis

6 Alternative Payments

6.1 Alternative Payment Instruments

6.1.1 Alipay

6.1.2 Tenpay

6.1.3 Apple Pay

6.1.4 Samsung Pay

6.1.5 PayPal

6.1.6 Huawei Pay

7 Regulations in the Cards and Payments Industry

7.1 Regulatory Framework

7.1.1 CUP’s payment guidelines

7.1.2 E-commerce regulation

7.1.3 Regulation on merchant service charge

7.2 Anti-Money Laundering (AML)

7.3 Foreign Direct Investment (FDI) Regulations

8 Analysis of Cards and Payments Industry Drivers

8.1 Demographic Drivers

8.2 Economic Drivers

8.3 Infrastructure Drivers

8.4 Business Drivers

9 Market Segmentation and New Product Launches

9.1 Market Segmentation and Targeting

9.1.1 Consumer cards

9.1.2 Commercial cards

9.2 New Product Launches

10 Payment Cards

10.1 Payment Cards Market Analysis

10.1.1 Volume and value of payment card transactions by type

11 Debit Cards

11.1 Debit Card Market Analysis

11.1.1 Turnover per debit card and transaction values by channel

11.1.2 Debit card scheme and issuer shares in terms of transaction value

11.1.3 Debit cards comparison

12 Pay Later Cards

12.1 Pay Later Cards Market Analysis

12.1.1 Turnover per pay later cards and transaction values by channel

12.1.2 Pay later cards scheme and issuer shares in terms of transaction value

12.1.3 Pay later cards comparison

13 Commercial Pay Later Cards

13.1 Commercial Pay Later Cards Market Analysis

13.1.1 Commercial cards comparison

14 Card Issuers

14.1 Agricultural Bank of China

14.2 Industrial and Commercial Bank of China

14.3 China Construction Bank

14.4 Bank of China

14.5 China Merchants Bank

15 Prepaid Cards

15.1 Prepaid Card Market Analysis

15.1.1 Prepaid cards comparison

16 Appendix

16.1 Tables

16.2 Contact GlobalData

16.3 About GlobalData

16.4 GlobalData’s Services

16.5 Disclaimer

List of Tables

Table 1: Key Definitions

Table 2: Annual Average Exchange Rate

Table 3: China – Key Facts, 2015

Table 4: Regional Benchmarking of Chinese Payment Cards, 2015

Table 5: Comparative Assessment of Alipay and Tenpay, 2015

Table 6: China – Mode of Entry of Foreign Banks

Table 7: Cards for High-Income Consumers, 2016

Table 8: Cards for Travelers, 2016

Table 9: Cards for Shoppers, 2016

Table 10: Cards for Students and the Young Population, 2016

Table 11: Commercial Cards Comparison and Key Features, 2016

Table 12: China – New Product Launches

Table 13: China – Debit Cards Comparison and Key Features, 2016

Table 14: China – Gold Credit Cards Comparison and Key Features, 2016

Table 15: China – Premium Credit Cards Comparison and Key Features, 2016

Table 16: China – Charge Cards Comparison and Key Features, 2016

Table 17: China – Commercial Pay Later Cards Comparison and Key Features, 2016

Table 18: China – Prepaid Cards Comparison and Key Features, 2016

Table 19: China – Payment Instrument Transaction Values (CNY Trillion), 2011–2015

Table 20: China – Payment Instrument Transaction Values (US$ Trillion), 2011–2015

Table 21: China – Payment Instrument Transaction Volumes (Million), 2011–2015

Table 22: China – Number of Payment Cards in Circulation by Type (Million), 2011–2020

Table 23: China – Volume of Payment Card Transactions by Type (Million), 2011–2020

Table 24: China – Value of Payment Card Transactions by Type (CNY Billion), 2011–2020

Table 25: China – Value of Payment Card Transactions by Type (US$ Billion), 2011–2020

Table 26: China – Number of Debit Cards in Circulation (Million), 2011–2020

Table 27: China – Debit Card Transaction Volumes and Frequency by Channel, 2011–2020

Table 28: China – Debit Card Total and Average Transaction Values by Channel, 2011–2020

Table 29: China – Debit Card Total and Average Transaction Values by Channel, 2011–2020

Table 30: China – Number of Debit Cards in Circulation By Scheme (Million), 2011–2015

Table 31: China – Debit Card Transaction Values By Scheme (CNY Trillion), 2011–2015

Table 32: China – Debit Card Transaction Values By Scheme (US$ Trillion), 2011–2015

Table 33: China – Debit Card Transaction Values by Issuer (CNY Billion), 2011–2015

Table 34: China – Debit Card Transaction Values by Issuer (US$ Billion), 2011–2015

Table 35: China – Number of Pay Later Cards in Circulation (Million), 2011–2020

Table 36: China – Pay Later Card Transaction Volumes and Frequency by Channel, 2011–2020

Table 37: China – Pay Later Card Total and Average Transaction Values by Channel, 2011–2020

Table 38: China – Pay Later Card Total and Average Transaction Values by Channel, 2011–2020

Table 39: China – Number of Pay Later Cards in Circulation By Scheme (Million), 2011–2015

Table 40: China – Pay Later Card Transaction Values By Scheme (CNY Trillion), 2011–2015

Table 41: China – Pay Later Card Transaction Values By Scheme (US$ Trillion), 2011–2015

Table 42: China – Pay Later Card Transaction Values By Issuer (CNY Billion), 2011–2015

Table 43: China – Pay Later Card Transaction Values By Issuer (US$ Billion), 2011–2015

Table 44: China – Number of Credit Cards in Circulation (Million), 2011–2020

Table 45: China – Credit Card Transaction Volumes and Frequency by Channel, 2011–2020

Table 46: China – Credit Card Total and Average Transaction Values by Channel, 2011–2020

Table 47: China – Credit Card Total and Average Transaction Values by Channel, 2011–2020

Table 48: China – Number of Credit Cards in Circulation By Scheme (Million), 2011–2015

Table 49: China – Credit Card Transaction Values By Scheme (CNY Trillion), 2011–2015

Table 50: China – Credit Card Transaction Values By Scheme (US$ Trillion), 2011–2015

Table 51: China – Number of Charge Cards in Circulation (Thousand), 2011–2020

Table 52: China – Charge Card Transaction Volumes and Frequency by Channel, 2011–2020

Table 53: China – Charge Card Total and Average Transaction Values by Channel, 2011–2020

Table 54: China – Charge Card Total and Average Transaction Values by Channel, 2011–2020

Table 55: China – Number of Charge Cards in Circulation By Scheme (Million), 2011–2015

Table 56: China – Charge Card Transaction Values By Scheme (CNY Billion), 2011–2015

Table 57: China – Charge Card Transaction Values By Scheme (US$ Billion), 2011–2015

Table 58: China – Personal and Commercial Pay Later Card Transaction Volumes (Million), 2011–2020

Table 59: China – Personal and Commercial Pay Later Card Transaction Values (CNY Billion), 2011–2020

Table 60: China – Personal and Commercial Pay Later Card Transaction Values (US$ Billion), 2011–2020

Table 61: China – Number of Commercial Pay Later Cards in Circulation (Million), 2011–2020

Table 62: China – Commercial Pay Later Card Transaction Values (CNY Billion), 2011–2020

Table 63: China – Commercial Pay Later Card Transaction Values (US$ Billion), 2011–2020

Table 64: China – Commercial Pay Later Card Transaction Volume (Million), 2011–2020

Table 65: China – Number of Prepaid Cards in Circulation (Million), 2011–2020

Table 66: China – Prepaid Card Transaction Values (CNY Billion), 2011–2020

Table 67: China – Prepaid Card Transaction Values (US$ Billion), 2011–2020

List of Figures

Figure 1: China – Payment Instrument Shares by Transaction Value (%), 2011 vs 2015

Figure 2: China – Payment Instrument Shares by Transaction Volume (%), 2011 vs 2015

Figure 3: China – E-Commerce Value (US$ Billion) and Payment Types (%)

Figure 4: China – Total Population and Structure

Figure 5: China – Economic Indicators

Figure 6: China – Number of ATMs, POS Terminals and Banking Structure

Figure 7: China – Real Household Consumption and Outbound Tourist Expenditure

Figure 8: China – Segmentation by Card Type, 2016

Figure 9: China – Growth in Payment Card Transaction Values and Number of Cards in Circulation by Type, 2011–2020

Figure 10: China – Volume and Value of Payment Card Transactions by Type (%), 2011–2020

Figure 11: China – Debit Card Penetration and Number of Debit Cards in Circulation, 2011–2020

Figure 12: China – Turnover Per Debit Card and Transaction Values by Channel, 2011–2020

Figure 13: China – Debit Card Scheme and Issuer Shares in Terms of Transaction Value (%), 2015

Figure 14: China – Pay Later Cards Penetration and Number of Pay Later Cards in Circulation, 2011–2020

Figure 15: China – Turnover Per Pay Later Cards and Transaction Values by Channel, 2011–2020

Figure 16: China – Pay Later Cards Scheme and Issuer Shares in Terms of Transaction Value (%), 2015

Figure 17: China – Pay Later Commercial vs Personal Cards, Transaction Volumes and Values (%), 2011–2020

Figure 18: China – Number of Commercial Pay Later Cards in Circulation, Transaction Value and Volume, 2011–2020

Figure 19: China – Number of Prepaid Cards in Circulation and Transaction Values, 2011–2020

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