China: E-commerce credit cards to outpace super-apps

The future for credit card payments in China looks secure

With an adult population approaching 1.2 billion, Chinese payment by plastic has no parallel worldwide: the number of individual credit, debit and prepaid cards combined will top ten billion for the first time by the end of this year, according to a report on China's cards and digital payments market from Argus Advisory Research (AAR).

Despite the fact that payment superapps have dominated media coverage, the future of cards seems secure, with usage having risen dramatically over the last half decade: transactions, for example, more than doubled in the 2015-20 period. In 2022, billed volume on credit cards is projected to grow by an impressive 11 percent, supported by a bolstered acceptance network and post-pandemic consumption fuelled by a burgeoning middle class.

This is by far the world's largest cards market by volume, valued at $15.3 trillion in 2020. Although interchange fees on credit cards remain constant, spend growth will see revenue from merchants rise ten percent rise in the coming year according to AAR, a leading provider of global market and competitor intelligence on payment cards, mobile and online payments, merchant acquiring and processing. Further helping a profit lift-off, net credit losses as a percentage of outstandings continue to edge downwards.

Chinese credit cards' long-term strength

Adding to the potential, Chinese e-commerce, now responsible for a quarter of the country's retail sales, continues to boom. Although the value of transactions on digital wallets such as Alipay and WeChat Pay is more than all other payment methods combined, the annual value for credit cards transactions is increasing at a blistering rate: with 20.4 percent growth forecast for 2022, it pips even the e-wallet on this measure.

"The big tech players have been concertedly chastened by the authorities in Beijing in recent years", notes David Hickey, senior research analyst at Argus Advisory Research. "It is no coincidence that this is happening just as the central bank's Digital Yuan is about to take its place in almost every citizen's pocket as the linchpin of a revamped payments processing, banking and fintech system that will be much more complex and tightly controlled than anything the world has ever seen."

Unusually, virtually all cards transactions here pass through the servers of a single network: UnionPay. That will change though, as foreign operators are slowly making their way into a historically protectionist market.

Argus Advisory Research's report on China's cards and payments landscape is one of many individual country reports, each with unique profit pool metrics and analysis. Leveraging data reaching back to 2010 – and forecasts up to 2024.
This extensive data set offers over 250 metrics for each market, featuring appendices that set out the market positions of the leading issuers and acquirers. The publication comes with 40 detailed data tables as well as informative and carefully compiled charts.

Each market report takes a consistent approach, with clear commentary and in-depth data providing comparable insight across markets. The China country report is available for subscribers to download now, or to order online.

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