The highly profitable credit card market could be opened up to foreign banks under proposals being considered by the banking regulator, said South China Morning Post. The China Banking Regulatory Commission was said to be looking to draw up new rules that would allow foreign entry into the credit and debit card markets in the near future. HSBC, Bank of East Asia and Standard Chartered have all submitted applications to issue foreign currency credit cards on the mainland, according to Visa International. Citibank has gained indirect entry to the market through its 5 per cent stake in Shanghai Pudong Development Bank.
The average mainland credit card user generates profit margins of 9 to 11 per cent, compared with 1.5 per cent for personal loans and 2 per cent for mortgages. There are currently fewer than 1m credit cards on the mainland, producing revenue of less than US$20m, according to estimates by consulting firm McKinsey & Co. This source of revenue is expected to grow to be worth US$3.4bn by 2010. About 95 per of China's 497m bank cards in issue are debit cards or ATM cards, with only 1.6 per cent being used for retail purchases, said Visa.