MasterCard will concentrate on educating Chinese customers about using credit cards, especially abroad, rather than blindly expanding its business in a market where it has nearly 100 million cards, a senior executive said. "People here are still not used to using plastic for purchases, due to a lack of understanding and because of a lack of coverage of merchants," Willie Fung, MasterCard's Greater China general manager, told Reuters in an interview on Thursday.
"In China you're looking at 350,000 merchants that use debit cards, and only 50,000 accept international-use credit cards," the Taiwan-born executive added.
That compares to the 36,000 merchants that take credit cards in Hong Kong, which has less than half a percent of mainland China's 1.3 billion people, and 150,000 in neighbouring Taiwan.
"If you do the comparison, there's a long way to go before it's really easy for people to use credit cards all over the place," Fung said, noting that Beijing and Shanghai were making great strides towards expanding credit card acceptance.
So far, there are only around three million true credit cards in China, although money machine debit cards that access bank accounts are plentiful with around 700 million on issue.
Of the 96 million cards with the MasterCard logo on them in China, 80 million are debit cards and 16 million are credit cards, though only around two million of those can be used abroad.
"We're probably not really going to try and increase that number," Fung said. "While the debit cards carry our logo, they cannot go abroad."
"Lots of tourists when they go abroad, they bring bundles of cash. They start to buy things even before getting on the aircraft, at duty free," he said, seated in a luxury hotel not far from Shanghai's historic Bund waterfront.
"We will try to move some into dual currency (cards) so if people want to travel they can have international cards, which will make their life much easier," he said, noting that is also a much higher margin business for MasterCard.
The New York-based MasterCard, which owns the Maestro and Cirrus brands and competes head-on with Visa International, is targeting China's rich - a fast-growing fraction of the country's enormous population.
Analysts say inadequacies in China's banking system - not to mention a low per-capita income of around $1,000 per year versus South Korea's $11,000 - could make foreign players pause.
In addition, there is no nation-wide credit bureau, where a customer's creditworthiness can be verified, though Fung said he was optimistic one would be up and running within the next few years, after a trial platform is rolled out this year.
Citibank and HSBC, the world's top two banks by market value, became the first foreign lenders to stake out a spot in the sector in 2004 when they served as advisers to their local partners' cards.
The country's middle class, seen as those with annual incomes of $5,000, now totals 65 million and should rise to 150 million by 2010, MasterCard predicts.
Comments
Comments are closed.