The Beijing Olympics in 2008 proved
to be a great source of motivation for China to develop its payment
card market. Exciting growth levels in the issuance of credit and
debit cards as well as its acceptance infrastructure caught the
attention of industry players all over the world.

Bar chart showing credit cards issued in China and the number of cardholdersConsultancy firms
Celent and Mercator have both researched China’s developing card
market and have documented their findings in respective reports.
Celent has focused on the credit card market in China, with
Mercator expanding their research to its payment card market as a
whole.

Celent is decidedly more optimistic
in its predictions for further growth. It claims credit card
penetration seen in China’s urban areas in 2008 was 44.5%, well
below that of 70 – 80% in Hong Kong and Taiwan.

Celent claims these figures show
tremendous potential for growth. It also predicts there will be
200m people in China with an annual income of over $2000 by the end
of this year. Only 38m of this potential group of 200m had a credit
card in 2008.

Terry Xie from Mercator takes a
different view. He claims growth rates in the payment market have
fallen and will continue to do so. After such exploding growth
rates, he claims this is a natural occurrence as the big cities
such as Beijing and Shanghai look close to reaching saturation
point. Rural areas in China are now increasingly becoming the
focus.

Migrating the payment card
acceptance infrastructure to rural areas will be challenging to say
the least.

Add in the fact that the global
recession has caught up with China and the Government economic
stimulus package introduced in 2008 to counteract this appears to
be dwindling – the micro-economic climate may not be quite stable
enough.

Although China may be facing increasing challenges, this must
not cloud the fact that card spending and the issuance of credit
and debit cards are still growing.