is reviewing applications from the locally incorporated units of
four foreign card issuers to issue yuan-denominated debit cards.
Citi, HSBC, Standard Chartered and Hong Kong’s Bank of East Asia
were the first foreign issuers to receive regulatory approval to
locally incorporate their mainland China operations earlier this
year, which is a prerequisite for offering local currency services
to Chinese retail customers.
Under China’s Administrative Rules on Foreign Banks, which took
effect in December 2006, foreign banks can issue their own brand of
bankcards when they register as local entities. However,
regulations dealing with risk control and payment systems have not
yet been published. The regulations are expected to stipulate
strict qualification requirements for e-payment operators, such as
a 49 percent cap on shareholdings by foreign investments, and at
least CNY100 million ($13 million) of registered capital.
In May, China agreed to allow foreign banks to issue
yuan-denominated cards following the China-US Strategic Economic
Dialogue, a bilateral macroeconomic forum. Before the agreement,
foreign banks were not allowed to offer their own brands of
yuan-denominated credit and debit cards in China. The Bank of East
Asia says it is planning to issue a debit card followed by a credit
card within one year, and has agreed to co-operate with Chinese
national bankcard organisation China UnionPay on handling bankcard
The People’s Bank of China has published figures showing Chinese
banks had issued more than 1.23 billion bankcards by the end of
2006, of which debit cards accounted for 1.08 billion, or 95.6
percent of the total. Credit cards in issue numbered 50 million.
Total bankcard transaction volume reached CNY1.89 trillion in 2006,
up 97 percent from 2005.
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