BEA and Citi Bank are the Only Banks Authorized for Credit Card Business in China, Informs Packaged Facts12 Feb 2013 • by Natalie Aster
There are two models for foreign banks’ credit card businesses: the first one is a joint-card model, by which foreign banks partner and share stakes with Chinese banks to issue credit cards; the second is an independent card model whereby foreign banks issue cards directly with a CBRC grant.
According to the report “The Credit Card Market in China: Opportunities for Foreign Firms” by Packaged Facts, there are two banks authorized for the credit card business: BEA as of 2008 and Citi Bank as of 2012. Other foreign banks are cooperating with Chinese banks.
The Credit Card Market in China: Opportunities for Foreign Firms
Published: January, 2013
Price: US$ 3,750.00
All of the foreign banks in the list are strategic investors of these Chinese banks with stakes of 5%-15%. They also invested in credit-card centers with funds, technology and management consulting services. In the card center operation, some foreign banks take a major role and co-brand on the card, as has been the case with Citi and Deutsche, while other foreign banks assign vice-presidents and do not co-brand like RBS. This kind of cooperation covers not only multi-currency card business, but also RMB cards.
BEA started its credit card business in 2008 and followed the strategies of its Chinese peers. Citi Bank got credit card licenses in 2012 and began targeting high-income groups. StandardCharted Bank and HSBC are intensively seeking opportunities in this high-income area.
With the rapid growth of CUP and the booming foreign currency card market, however, the relationship changed such that CUP and Visa developed into competitors rather than partners. CUP set up its own network overseas and charged a lower interchange fee. The former division-of-spoils arrangement based on domestic vs. international currency transactions fell apart. In 2010, Visa forced its member banks to stop using CUP’s payment system to process international transactions for co-branded credit caards by threatening to charge penalties if banks did not comply. The cooperation between the two giants broke off. From then on, CUP gradually expanded its co-operation with MasterCard and to a lesser degree with American Express, and stopped considering new business lines with Visa.
More information can be found in the report “The Credit Card Market in China: Opportunities for Foreign Firms” by Packaged Facts.
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