China third party payment market report Part 4 – Credit card payment

No. 4 Credit card payment

  1. 1. Brief introduction

Credit card payment mainly include offline payment(POS terminals, ATM) and online payment. According to the purpose and nature of this research, we will focus on online credit card payment market analysis.

According to a report by a famous consulting firm, until 2008, about 150 million credit card have been issued by Chinese bank. There are 45 million credit card holders.[1]

Using credit card to make payment has become a trend. In e-commerce, users can use credit card to make payment online and by telephone, which is very convenient. The security issue of make payment online by credit card is becoming the biggest hindrance of online credit card payment.

The credit card of Bank of China, The Agricultural Bank of China, China Minsheng Bank and SPD bank don’t support online payment. Credit cards from other banks all support online transfer. But there is strict single transaction limit, daily limit and monthly limit.

  1. 2. Features

1)      Huge users base

There are 150 million credit card issued to 45 million credit card users by 2008, this is a huge market.

2)      Unbalance of credit card market

People work in government and start-run companies are easily to apply for credit cards. But those who work in private company or the people in rural area is hard to get credit cards. In other words, those credit card owners are mostly urban residents that have good job and decent income.

3)      Credit card payment integrated with B2C E-commerce

According to a market report, credit payment option on B2C website are welcomed by many credit card owners, especially low-income credit card owner that hope to use credit consumption to buy products online.

4)      Integration with third-party payment platform

Major third party payment platforms like Alipay, Tenpay, Chinapay, 99bill all allow users to use credit card to deposit payment to their account on third-party payment platforms.

5)      Low usage rate

Only 20% to 40% credit card are in use, others has been discarded.[2]

  1. 3. Users base

By 2008, the major banks in China have issued 145.53 million credit cards to 45 million users. On average, every credit card holder has 3.23 credit cards. According to a report on China credit card market, only 20% to 40% credit cards are activated(others are discarded)[3]. Among all the major banks, Industrial and commercial bank of China has issued 39.05 million credit cards, rank No. 1 among all major banks in China. China merchants bank, China construction bank, China bank and china communication bank have also issued more than 10 million credit card by 2008.[4]

  1. 4. Market share

The total credit card consumption amount in 2008 is 700 billion RMB, that is far bigger than China third-party payment market(about 100 billion). But most credit card payment are made offline. We don’t find any statistics available online to suggest the online credit card payment proportion. We think it is not more than 10% of overall credit card payment amount.

  1. 5. Growth rate

The credit card number and credit card holder number has increased significantly in 2007 and 2008. The credit card number has increased from 58.8 million in 2006 to 99.76 million in 2007, and then 145.33 million in 2008, the annual growth rate in 2007 and 2008 respectively is 69.66% and 45.88%. The credit card users has increased from 20.6 million in 2006 to 31.77 million in 2007, and then 45 million in 2008, the annual growth rate in 2007 and 2008 respectively is 54.22% and 41.64%.

  1. 6. Geographics

China credit card users are mainly urban residents that have good education background and decent income, according to a recent report by People Daily, rural residents don’t enjoy the benefits of credit card. The reasons for that are: 1) Rural area don’t have enough ATM and POS to accept credit cards; 2) banks set a high threshold that rural residents are automatically disqualified to apply for credit cards.

  1. 7. Future trends

In China, only 45 million people out of 1.3 billion have credit cards, so the users base will keep growing at fast speed.

With the development of infrastructure and consumption habit, also the loosening of credit card application threshold, rural area residents will begin to use credit card in the near future.

With the development of credit system in China, the total consumption amount per user will increase, people will get used to credit consumption.

Online credit card payment will become more popular when the security issue is guaranteed as it is really convenient. Government has some concerns at the moment that online credit card payment will cause illegal cash withdrawal from credit card and money laundering. Orders have been given to major banks that when potential risk of online credit card payment happen, major banks should cease the online payment function of their credit cards. Online third-party payment service provider will take more strict steps to verify online credit card payment.

So we can anticipate that the regulation and supervision of online credit card payment will become more strict.


[1] According to http://www.enfodesk.com/msite/mainv2/index.php?menu=info_index&sub_menu=info_detail&info_id=125

[2] http://www.enfodesk.com/msite/mainv2/index.php?menu=info_index&sub_menu=info_detail&info_id=125

[3] According to http://www.enfodesk.com/msite/mainv2/index.php?menu=info_index&sub_menu=info_detail&info_id=125

[4] According to the report at http://chinasourcing.mofcom.gov.cn/bj/content2.jsp?id=44256

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  1. […] 10.China third party payment market report Part 4 – Credit card Using credit card to make payment has become a trend. In e-commerce, users can use credit card to make payment online and by telephone, which is very convenient. The security issue of make payment online by credit card is becoming the biggest hindrance of online credit card payment. … No. 4 Credit card payment… http://www.china-online-marketing.com/blog/market-research/china-third-party-payment-market-report-part-4-%E2%80%93-credit-card-payment/ […]

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