China’s Prepaid Card Market Exploding

by Terry X Xie 0

It is hard not to be amazed by what is currently happening inthe prepaid card market in China right now. Prepaid cardnetworks/issuers are telling me that their businesses are growing300-500 percent this year and they expect to see similar growth in2011.

The growth comes mainly from so called shopping cards, intendedfor making purchases at multiple merchants. Major retailers alsoissue closed-loop cards accepted only in their own stores. Butmulti-purpose shopping cards are quickly becoming Chineseconsumer’s favorite prepaid cards for their flexibility.

Most card programs operate in one market only with a handfulexpanding beyond their home markets. There are dozens of prepaidcard programs currently operating in Beijing, the largest and mostactive market for prepaid cards. Shanghai is the other major marketfor prepaid cards with many competing programs. Other markets aresmaller but nonetheless growing fast.

Other major prepaid card categories in China includepetroleum(gas) cards and prepaid telco cards. These categories arealso growing quickly, but not nearly as fast as the open-loopshopping cards.

The rapid growth of prepaid cards, especially thosemulti-merchant prepaid cards, has come without clear regulation andguidance from the regulators. But a new regulation is currentlyunder consideration which, if approved, will cover a wide range ofaspects of the prepaid card industry. Mercator has been closelyfollowing the developments in this area and will provide up-to-dateinformation to Mercator’s members.

More information about China’s prepaid card market will beavailable in Mercator’s upcoming report “China’s Prepaid CardMarket 2010”, expected to be published at the beginning of2011.

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