A detailed analysis of the cards, payments and consumer banking landscape in China, with a full analysis of market trends both historic and forecast.
China is the world's largest cards market, with a unique payments ecosystem characterised by the widespread use of mobile payments and innovations to service the vast numbers of people enjoying the fruits of economic uplift.
Having seen that spell of high growth dramatically broken by the pandemic, consumer spending began to recover in the second half of 2020.
Another unique feature is the increasing control being exerted by the authorities: the prospect of major payments IPOs has met with official disapproval and new regulation could disrupt the mobile payments industry as Beijing considers the dominance of QR payments and the big players behind them.
Although the credit cards market is showing signs of a slowdown, opportunities abound for international players as the market finally opens up.
How QR-based super apps have transformed payments.
Which regulatory move may fuel a UnionPay recovery in China.
Why this cards market has become so attractive to international issuers and networks.
Which credit card profitability drivers to watch.
How acquiring, led by the central bank, is becoming more integrated.
TABLE OF CONTENTS
Demographics and the economy
Chinese cards market
Key retail banks and issuers
Acquiring and processing
Regulatory and other cards market information
Appendices: Card Payments Data
Appendix I: Demographics and the economy
Appendix II: Payments environment
Appendix III: Cards market data
Appendix IV: Mobile payments data
Appendix V: Profit pool
Appendix VI: Card networks
Appendix VII: Key retail banks and issuers
Appendix VIII: Acquirers and processing
Appendix IX: Online acquiring data
Demographics and Economy
Chinese society has become more affluent in recent years, with GDP experiencing constant growth and averaging 6% over a thirty-year period. In 2019, GDP reached $14.2 trillion and a growth rate of 6.1%.
China is home to the largest cards market in the world by volume, reaching $12 trillion in value in 2019. All domestic card transactions go through the UnionPay network, though the market has finally been opened up to foreign operators.
China's payment cards market is viewed as one of the most attractive worldwide, due to the potential of its vast population. The total number of debit and credit cards in issue in China reached 8.6 billion at the end of 2019, representing a remarkable penetration rate of 744 cards per 100 adults.
China is a unique market with regards to payments in that paying with one's phone is an everyday gesture. It is estimated that approximately 92% of people living in the largest cities utilise mobile payments daily.
According to Verisk Financial Research estimates, credit card pre-tax profit was $35 billion in 2019, an increase of over 1000% since 2013. Credit card business income is dominated by interest income, instalment fees and merchant revenue.
While the Chinese market has now been formally opened up, American Express is the only foreign network to have received approval from the central bank to process domestic payments, which it will begin doing towards the end of 2020. UnionPay is the only authorised interbank transfer network in the country.
Key Retail Banks and Issuers
The Chinese retail banking sector is the largest in the world with approximately $40 trillion in assets. The industry is dominated by a Big Four: the Industrial and Commercial Bank of China (ICBC), the Bank of China (BOC), the China Construction Bank (CCB) and the Agricultural Bank of China (ABC, or AgBank).
Acquiring and Processing
Card acquiring was traditionally dominated by the banks and China UMS but third-party licensees have grown in prominence over recent years. As it stands, there are hundreds of acquiring institutions, including 90 banks and 238 third-party payment institutions.
China is the largest e-commerce market in the world, with rapid growth seen over the last several years. This has been fuelled by increasing internet and smartphone penetration: there were around 879.2 million internet users and an 88% penetration rate of smartphones at the end of 2019.
Regulatory and Markets Information:
In January 2020 the first foreign network to finally be granted access to the market by the issuance of a licence was American Express, followed in short order by Mastercard. However, foreign networks and others entering the market will now have to compete with large and well-established players and alternative payment methods.
Agricultural Bank of China
Bank of Beijing
Bank of China
Bank of Communications
Bank of East Asia
Bank of Shanghai
Beijing Haike Rongtong Payment Service
China Banking Regulatory Commission
China CITIC Bank
China Construction Bank
China Everbright Bank
China Guangfa Bank
China Merchants Bank
China Minsheng Bank
China Mobile Alliance
China National Petroleum Corporation
China Securities Regulatory Commission
China UnionPay Merchant Services
Digital Currency Electronic Payment
Digital Currency Research Institute
Hong Kong Stock Exchange
Industrial and Commercial Bank of China
Joint Stock Commercial Bank of Foreign Trade of Vietnam
Lakala Payment Company
Million Card Company
Mitsubishi UFJ Nicos
Nanyang Commercial Bank
National Development and Reform Commission
NetsUnion Clearing Corporation
Oriental Commercial Bank of Bangladesh
People's Bank of China
Philippine National Bank
Privredna Banka Zagreb
Quan Min Fu
Shanghai Pudong Development Bank
Shanghai Stock Exchange
State Administration for Market Regulation
United Overseas Bank
Vostochny Express Bank
World Trade Organization
Verisk financial reports include detailed market and competitor intelligence on payments cards, e-money, acquiring, retail banking, and consumer credit in the Asia Pacific region. Analysts use primary and secondary source data and conduct in-depth interviews with senior industry executives and finance experts.
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