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China Country Report

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  • Published Date: January 2022

CHINA CARDS & PAYMENTS REPORT

A detailed analysis of the cards, payments and consumer banking landscape in China, with a full analysis of market trends, both historic and forecasts to 2024.
As China's ever-swelling middle-class avails of spend opportunities, digital methods have seen massive growth, bringing with them powerful platforms with a reach far beyond their Western counterparts.
In recent years, these commercial payments ecosystems have been brought to heel as Beijing assembles a centrally permissioned payments processing, banking and fintech system positioned to support the new Digital Yuan, which will soon be in use by the vast majority of citizens.

What you can learn from this China cards market report:

How mobile payments rose from last to first in five years.
Where a transformed Chinese lending sector is headed
How credit cards are growing more sophisticated
What proposed regulation means for credit cards in China

CHINA COUNTRY REPORT | KEY FACTS

  • China's 2021 economic growth rates suggest that the country has rebounded well from the upheavals with which the decade began. However, there are strong headwinds coming from a troubled real estate sector.
  • Cash use is dwindling here, long one of the most dynamic and advanced payments markets in the world: mobile payments account for a significant portion of everyday consumer payments.
  • Some 95 percent of city dwellers utilise mobile payments daily, while about half of their rural counterparts also rely on them.
  • QR codes for payments are popular, with the relatively low cost of implementation for merchants being a key driver of mass adoption.
  • Facial recognition is expected to replace QR codes for payments in the medium to long term.
  • The leading fintechs have been subject to a regulatory clampdown largely prompted by fears of too-big-to-fail risks.
  • American Express, through its joint venture here, announced the issuance of its first debit card products to support renminbi transactions on its network.
  • Credit card profits grew by nine percent in 2020, a marked slowdown from average growth rates of 29 percent over the previous three years.
  • Some one in five people have installed the e-CNY (or digital yuan) wallet of the central bank's digital currency that is currently in testing; a formal launch is expected in 2022.

China Payments Research | Report Contents

TABLE OF CONTENTS
Demographics and the economy
Payments environment
Cards market
Mobile payments
Profit pool
The networks
Key retail banks and issuers
Acquiring and processing
Online acquiring
Regulatory and other cards market information

Appendices: China Payments Data Tables

Appendix I: Demographic and economic indicators

Data table 1: Demographic and economic indicators: 2015-2020. Estimates and forecasts to 2024.
Data table 2: Ownership of key consumer devices: 2015-2020. Estimates and forecasts to 2024.
Data table 3: Internet usage by population: 2015-2020. Estimates and forecasts to 2024.

Appendix II: Payments environment

Data table 4: Access points: 2015-2020. Estimates to 2022.
Data table 5: Account penetration: 2015-2020. Estimates and forecasts to 2024.
Data table 6: Consumer payment: trends 2015-2020. Estimates and forecasts to 2022.
Data table 7: B2C e-commerce payment methods: 2015-2020. Estimates and forecasts to 2022.

Appendix III: Cards market

Data table 8: Total cards payment metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 9: Contactless cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 10: Credit card numbers: 2015-2020. Estimates and forecasts to 2024.
Data table 11: Total credit cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 12: Credit cards profitability indicators: 2015-2020. Estimates and forecasts to 2024.
Data table 13: Debit cards numbers: 2015-2020. Estimates and forecasts to 2024.
Data table 14: Debit cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 15: Prepaid/e-money cards metrics: 2015-2020. Estimates and forecasts to 2024.

Appendix IV: Mobile payments

Data table 16: Mobile proximity payment metrics: 2015-20. Estimates and forecasts to 2024.
Data table 17 : Mobile P2P payments: 2018-20. Estimates and forecasts to 2024.

Appendix V: Profit pool

Data table 18: China market profit pool: 2015-20. Estimates and forecasts to 2024 including credit card numbers, billed volumes, outstandings, interest incomes, net interest revenues, merchant revenues, card fee revenues, other non-interest incomes, total revenues, net credit losses, operating expenses, total expenses, pre-tax profits, merchant service charges, rollover rates, APR, net credit losses to outstandings, operating costs to revenues, ROA (pre-tax profits to outstandings).

Appendix VI: Card networks

Data table 19: Networks' credit card market shares: 2015-20. Estimates and forecasts to 2022.
Data table 20: Networks' credit card data numbers: 2015-20. Estimates and forecasts to 2022.
Data table 21: Networks' credit card billed volume: 2015-20. Estimates and forecasts to 2022.
Data table 22: Networks' number of credit card transactions: 2015-20. Estimates and forecasts to 2022.
Data table 23: Networks' average credit card transaction value: 2015-20. Estimates and forecasts to 2022.
Data table 24: Networks' debit card market shares: 2015-2020. Estimates and forecasts to 2022.
Data table 25: Networks' debit card data numbers: 2015-2020. Estimates and forecasts to 2022.
Data table 26: Networks' debit card billed volume: 2015-2020. Estimates and forecasts to 2022.
Data table 27: Networks' number of debit card transactions: 2015-2020. Estimates and forecasts to 2022.
Data table 28: Networks' average debit card transaction value: 2015-2020. Estimates and forecasts to 2022.

Appendix VII: Key retail banks and issuers

Data table 29: Key credit card issuers market shares by credit card numbers: 2017-2020. Estimates and forecasts to 2022.
Data table 30: Key issuers market shares in credit card outstandings: 2017-2020. Estimates and forecasts to 2022.
Data table 31: Key debit card issuers market shares by debit card numbers: 2017-2020. Estimates and forecasts to 2022.

Appendix VIII: Acquirers and processing

Data table 32: Merchant acquirer credit card market share: Estimates for 2021.
Data table 33: Credit card merchant service charges: 2015-2020. Estimates and forecasts to 2024.
Data table 34: Merchant acquirer debit card market share: Estimates for 2021.
Data table 35: Debit card merchant service charges: 2015-2020. Estimates and forecasts to 2024.
Data table 36: Credit card issuer/issuing processor relationships
Data table 37: Credit card acquirer/acquiring processor relationships
Data table 38: Credit card issuing processor market shares by card numbers: Estimates for 2021.
Data table 39: Credit card acquiring processor market shares by the number of POS transactions: Estimates for 2021.

Appendix IX: Online acquiring

Data table 40: Online merchant acquirer market share. Estimates for 2021.

China Country Report | Selected Extracts

Demographics and Economy
Chinese society has become more affluent in recent decades, with GDP experiencing constant growth and averaging 6% over a 30-year period to reach $16 trillion. However, in a Covid-dominated 2020, the growth rate fell to a mere 2.3%. This was the lowest seen in 30 years.

Payments Environment
China is the largest cards market in the world by volume, valued at $15.3 trillion in 2020. Virtually all domestic card transactions go through the UnionPay network, though the market has finally been opened up to foreign operators.

Cards market
Due to the potential of its vast population, China's payment cards market is viewed as one of the most attractive worldwide. The total number of debit, credit and prepaid cards in issue here reached nine billion at the end of 2020.

Mobile Payments
China is a unique market with regards to payments in that paying with one's phone is an everyday occurrence. Over 850 million people use mobile payments, on average three times per day, 85 percent of which are via QR codes.

Profit Pool
According to Verisk Financial Research estimates, credit card pre-tax profit reached $42 billion in 2020, an increase of 197% since 2015. Credit card business income is dominated by
interest income, instalment fees and merchant revenue.

Card Networks
The licensing of networks by the central bank to set up a domestic bank card clearing institution in the country is likely to spur some competition in the Chinese payment card market, which has, until now, been dominated by UnionPay.

Key Retail Banks and Issuers
Initially hit hard by the pandemic, the banking sector bounced back in 2020 and the early half of 2021 as demand for online services significantly increased and number and activity level of customers rose rapidly.

Acquiring and Processing
China UMS tends to dominate in the four biggest ('first-tier') cities, where it enjoys a monopoly position thanks to strong POS terminal coverage ... Most issuers operate credit card
processing in house. Some issuers have outsourced non-core credit card activities, such as debt collection, merchant development and maintenance, along with data processing.

Online Acquiring
China is the largest e-commerce market in the world, with rapid growth seen over the last several years. As of 2021, some of the largest e-commerce sites are based here ... E-commerce development here has been fuelled by increasing internet and smartphone penetration.

Regulatory and Markets Information
Supervision of the payment industry is tightening as the government intends to reshape the dominance of the nonbank payments market held by the likes of Ant's Alipay and Tencent Holdings' WeChat Pay.

China Payments Report | Entities Referenced

99Bill
ABC
AgBank
Agricultural Bank of China
AliExpress
Alipay
American Express
Ant
Ant Financial
Ant Group
Apple Pay
Bank of Beijing
Bank of China
Bank of Communications
Bank of East Asia
Bank of Shanghai
BOC
BOC Services
CBRC
CCB
China Banking Regulatory Commission
China CITIC Bank
China Construction Bank
China Everbright Bank
China Guangfa Bank
China Merchant's Bank
China Minsheng Bank
China Mobile Alliance
China National Petroleum Corporation
China Securities Regulatory Commission
China UMS
China UnionPay
China UnionPay Merchant Services
ChinaPnR
Citibank
CITIC
CMB
CNPC
Ctrip.com
Deutsche Bank
Digital renminbi
Digital yuan
Diners Club
E-CNY
Express (Hangzhou) Technology Service Company
Fen Fu
Frog Pro
GoPay
Guangdong Branch of Bank of China
Guangfa
HSBC
Huabei
Huawei Pay
Huaxia Bank
ICBC
Industrial and Commercial
JCB
JD
Jiebei
JPMorgan Chase
JPQR
Lakala Payment Company
LexinFintech
LianLian DigiTech
Mastercard
Masterpass
Mi Pay
Million Card Company
Minsheng
MYbank
Nanyang Commercial Bank
NetsUnion Clearing Corporation
NUCC
OnePlus
OnePlus Pay
Oppo
Osell.com
Payease
Payment Clearing Association of China
PayPal
PBoC
PCAC
People's Bank of China
Pinduoduo
Ping An Bank
QuickPass
SAMR
Samsung Pay
Shanghai Pudong Development Bank
Sichuan Airlines
Standard Chartered
State Administration for Market Regulation
Stripe
Taobao
Tencent
TenPay
Tmall
UMS
UMS Pay Register
UnionPay
UnionPay Merchant Services
Visa
Vivo
WeBank
WeChat Pay
WhatsApp
Winter Olympic Games
World Trade Organization
WTO
Xiaomi
YeePay
Zheshang


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Reports include detailed market and competitor intelligence on payments cards, e-money, acquiring, retail banking, and consumer credit in the Asia Pacific region. Analysts use primary and secondary source data and conduct in-depth interviews with senior industry executives and finance experts.

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