Credit Card Systems in China: Technology and Vendor Overview

by Hua Zhang, January 8, 2010
Vendor Reviews
Asia-Pacific

Abstract

The credit card market is rapidly developing in China. The number of card holders has exceeded 30 million. In the past three years, the annual growth rate reached 54%, and it is expected to retain an average annual growth rate of 30% over the next four years.

In a new report, Credit Card Systems in China, Celent examines the growth of the credit card industry. Although card saturation in big Chinese cities like Beijing and Shanghai has reached 60%, many second and third tier cities have yet to open up. Along with the expanding volume of cards issued, however, risks in usage are also increasing.

By the end of 2008, the biggest issuing banks of credit cards were the Industrial and Commercial Bank of China, China Merchants Bank, China Construction Bank, the Bank of China, and Bank of Communications. In the next four years, Celent expects that about eight banks will have exceeded 10 million credit cards issued apiece, and about 30 banks will have issued over 1 million cards. This means that more banks will need to upgrade their systems to support a bigger scale of operations.

Large banks in China usually use self-built credit card systems, while small and medium-sized banks often choose to outsource. At present, only one-third of credit cards use the outsourcing model, due to the relatively late entrance of small and medium-size banks and foreign banks into the Chinese credit card market. However, it is expected that more credit cards will be operated via outsourcing in the future.

"At present, China's credit systems are basically foreign-run. Banks in China accept foreign credit card systems more readily,” says Hua Zhang, analyst with Celent's Asia Research Group and the author of the report. “With increased profitability and the development of new technology, credit card systems will need to link with CRM and network systems to practice a more customer-centric business philosophy.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Tylor Tourville
ttourville@celent.com
Tel.: +1 617 424 3284

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

Executive Summary

3

Credit Card Industry in China

5

 

Volume of Cards Issued

5

 

Development of the Credit Card Market

6

Introduction of System Vendors

8

 

Atos

8

 

Comex

8

 

Essentis

8

 

GFG Group

9

 

Oasis Technology Limited

9

 

RS2 Software Group

9

Systems Used in China’s Credit Card Industry

10

 

Public Credit Registry System

10

 

Credit Card Systems Adopted by Chinese Banks

11

 

Overview of Credit Card Systems

14

 

Functionality of Credit Card Systems

15

 

Technology Trends

16

Major Credit Card Processors

18

 

First Data

18

 

China UnionPay Data Services

19

Conclusion

22

Looking into the Future

22

Leveraging Celent’s Expertise

24

 

Support for Financial Institutions

24

 

Support for Vendors

24

Related Celent Research

25

Sign in to download reports and access personalized information