Growth in financial card transactions decelerates but remains dynamic in 2014
Economic slowdown in China, as well as the uncertain global economy, resulting in weaker consumer confidence and less frequent transactions, slowed the growth in total card transactions in 2014. A significant slowdown in pre-paid card transactions, due to strict anti-corruption regulations, had an influence on the overall financial cards market. However, growth in financial card transactions remained dynamic in both volume and value terms, thanks to the deepening penetration of debit cards, as well as consumers’ growing acceptance of credit cards.
Pre-paid card transactions plummet due to anti-corruption policy
Pre-paid cards, widely used as gifts and employee benefits in state-owned enterprises, as well as government departments and institutions in China, recorded a significant slowdown in growth in cards in circulation, transactions and retail value in 2014, due to the strict regime of China’s government, since pre-paid cards are closely related to gift-giving behaviour, which may cause serious bribery issues.
Integrated circuit (IC) cards accelerate under relevant authorities’ regulations
To improve transaction security as well as transaction efficiency, the upgrading to integrated circuit (IC) cards from magnetic stripe cards was accelerated further in 2014. In addition, the People’s Bank of China has promoted replacement by integrated circuits, with a statement that national commercial banks should no longer issue magnetic stripe financial cards after January 2015. To further boost the development of integrated circuit cards, leading banks are making great efforts to replace their magnetic stripe debit cards with IC debit cards. The Bank of Communications, for instance, offers a transfer service to its customers by upgrading their debit cards without changing their account numbers.
China’s Big Four continue to lead despite intensifying competition
China’s Big Four commercial banks – Agricultural Bank of China, Industrial & Commercial Bank of China, China Construction Bank and Bank of China – hold the leading positions in China’s card payment transactions market, with the lion’s share of total transactions in both value and volume terms. Their nationwide service networks, highly recognised brands and reliable reputations attract a huge consumer base, contributing to their comfortable lead in the market. Moreover, the increasing penetration of rural areas by the four largest commercial banks in China contributes to their leading position.
Financial cards and payments expected to see further healthy growth
Financial cards and payments are expected to continue to see steady and healthy growth over the forecast period, driven by the deeper penetration of financial cards, as well as rising consumer acceptance of cashless transactions. Moreover, a more secure and efficient transaction environment of cashless transactions, which has been given great importance by commercial banks and the relevant authorities, will propel the development of financial cards and payments.
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