Americans, Brits and Canadians take credit cards for granted because plastics are so ingrained to our cultures, so when China became active in the card market interest in the market ignited though regulators announced that China Union Pay, not MasterCard or Visa, would be the resident payment network. Given the generally closed consumer economy and the remoteness of the far reaches of China, that decision was probably correct.This article has some interesting growth volume, and with the recent, exciting alignment of First Data and China’s Ant Financial, it’s time to watch the market again for interesting developments that can ripple across the globe.
• Credit card penetration rates may begin rising again in China, as the government deregulates the industry and lowers the cost of card transactions for borrowers and merchants.
• Mobile payment platforms face tighter regulatory oversight but market leaders such as Alipay will continue to encroach with a greater range of consumer credit options.
• Stories of the death of credit cards in China may have been greatly exaggerated.Unlike the US market, where milleneal credit card usage lags because of overburdened students facing the realities of education loans, surveys show this Asian behemoth as more comfortable with retail debt, which doubled since China’s financial crisis.• To encourage this, the People’s Bank of China is liberalising the card market, even as it increases oversight of third-party payment platforms, which have thrived in a regulatory vacuum.
• Pressure is nonetheless mounting on traditional card issuers. Huabei, Alipay’s consumer credit services, has moved beyond providing loans for purchases on Alibaba’s Taobao and Tmall online ecommerce platforms to provide credit for offline transactions at a rapidly expanding network of participating vendors.Definitely worth a read. If this article interest you, keep your eye out for an upcoming Mercator Advisory Research Note, scheduled for next quarter, where we do a deep dive on cards in the BRIC countries (Brazil, Russia, India and China)
Overview by Brian Riley
, Director, Credit Advisory Service at Mercator Advisory Group
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