China Bankers See Cards Expanding Consumer Banking

Retail bankers in China have put a priority on expanding the use of payment cards by consumers in the Asian giant, according to a recent survey of top banking executives that was released this week by First Data Corp. And half the bankers agreed that China needed to create a better database of consumer credit history to build its card payments infrastructure.

Credit cards and bank accounts were cited by 55 percent of the bankers as “highly promising” in building the personal banking industry in China over the next three years. Debit cards were called highly promising by 45 percent of the bankers, followed by wealth and investment management advice by 40 percent. The respondents were allowed to cite more than one product in the question.

The key to growing the card payments business is building a better technology infrastructure between banks and merchants according to more than 80 percent of the bankers. Half the bankers said that a payments infrastructure required better availability of consumer credit history data.

The executives were less confident when predicting the profit potential of the card market, according to the survey. Only 21 percent felt the credit card market would be profitable over the next three years while 79 percent said either it would not be profitable or they weren’t sure what would happen.

The challenge is convincing merchants to accept plastic. Eighty percent of the bankers said that retailers’ preference for cash is a very significant or significant barrier to expanding card payments.

The survey of 152 senior banking executives was conducted in March and April for First Data by the Economist Intelligence Unit. The Economist supplemented the survey with in-depth interviews with more than 20 of the executives.