Citibank announced on July 16 that it had received regulatory approval to issue renminbi-denominated debit cards to its mainland China customers.
Prior to this, Hong Kong-based Bank of East Asia was the only foreign lender permitted to issue debit cards on the mainland. The likes of HSBC and Standard Chartered, meanwhile, are still waiting to get the green light for their debit card operations.
Foreign lenders have been frustrated by their lack of progress in gaining access to China’s retail banking market. They were allowed to offer local currency services to mainland individuals from the end of 2006, but new products required regulatory approval, which in some cases was not forthcoming. It took intervention from US Treasury Secretary Henry Paulson to get the wheels turning.
Denied the ability to issue debit cards, foreign banks face an uphill task in competing with well-established domestic players. Foreign exposure to the credit card market, meanwhile, extends no further than joint ventures with local lenders.
Although the number of credit cards in circulation reached 104.7 million at the end of March, up 92.9% year-on-year, debit cards still dominate. They account for 93.4% of the bank card market, according to the People’s Bank of China.
The combined transaction value of debit and credit cards rose 58% year-on-year to reach US$118.5 million at the end of March.