Bankcard is the most widely used non-cash payment instrument of individuals in China, including debit card 1, credit card2 and quasi-credit card3. The wide applications of bankcards have considerable significances to promote tourism and consumption, enlarge the tax bases and improve the image in the international society. Having developed for over 20 years, our country has created a bankcard payment system with Chinese characteristics primarily, and the Chinese characteristics are presented in bankcard products, acceptance market, developing mode etc.
A bankcard products system has basically formed, in which debit card is the mainstay and credit cards develop rapidly. As a kind of electronic bankbook to absorb deposits, debit card is easy to apply and use with low handling charges and annual fee. In the present years, as the market competitions of bankcards are getting fiercer and creative senses of those financial institutions in the banking industry are strengthening, the functions of debit card are extended continuously while the application range is enlarging and varieties are richening, making debit card a dominant product among bankcards. Up to the end of 2006, our country has issued 1,081,350,000 debit cards, which had a 17.4% increase comparing with that till the end of 2005 and it’s 95.6% of the total card issuance volume (1,130,930,000). Credit card provides a consumer credit function and has a larger space to develop. Some of important financial institutions in the banking industry have founded independently operated credit card4 centers one after the other to reinforce their marketing, develop consumer credit businesses for individuals extensively and push the development of credit card greatly. Till the end of 2006, our country’s issuance volume of credit cards was 49,580,000, which was 4.4% of the total card issuance volume and its function of consumptive payment has emerged primarily.
The acceptance markets of bankcards develop rapidly. In order to reinforce constructions of bankcard acceptance markets and scale-up the generalizations among merchants, the People’s Bank of China works with related authorities and actively promotes bankcards’ applications in tax payments, payments to public utilities as well as some fields closely related with people’s daily life, such as hospitals, communication companies and schools, especially applications of medium and small merchants and in medium and small cities; makes sure the bankcard networks are operated safely and stably, and increases the rate of successful card transactions; standardizes the bankcard acceptance markets and boosts sound developments of the acceptance markets. Till the end of 2006, there were 521,000 merchants that accepted bankcards, 818,000 sets of POS machines5 and 102,000 sets of ATM. The payment function of bankcards is effectively performed, and the habit of credit card consumption has been basically formed. In 2006, except wholesale-type high value transactions and transactions for real estate, the ration of the consumed amount paid by bankcards of China was up to 17% of the total retail amount of social consumables of the whole country, with a 7% year-on-year increase. However, this was much lower than 30 ~ 50%, which is the level in the developed countries on average. Meanwhile, in accordance with the developing strategy of Chinese bankcard industry, the acceptance markets of bankcards realized “going abroad and going to the countryside”. It’s in 2004 that RMB bankcards began to step out of China, and RMB bankcards can be transacted in 24 foreign countries and regions, which provides convenience to local residents for their overseas businesses and need for tourism and consumptions. In 2006, the People’s Bank of China organized and developed Bankcard Featuring Service for Peasant Workers in 12 top provinces (autonomous regions and municipalities directly under the Central Government) for peasant workers provisions, including Guizhou, Shandong, Fujian, Chongqing, Jiangsu, Hunan, Jiangxi, Sichuan, Shanxi, Yunnan, Henan and Guangxi; so bankcard handling services expanded to rural areas, and peasants who work in developed areas can draw cash from rural credit cooperatives in their hometowns, which makes it much more easier for peasant workers to draw and deposit money.
A development model of bankcard, which combines governmental acceleration and market mechanism$ is etablished. The Party Central Committee and State State Council always pay much attentions to national bankcard business, concern and support bankcard business a lot; meanwhile, they made crucial decisions for several times for serious problems occurred during the development of bankcards, provided specified requirements and pointed distinct directions for the development of bankcards. The People’s Bank of China cooperated with other related authorities to make series of policies and measures, providing a favorable policy environment for the development of bankcards and boost bankcard business. Specially, the People’s Bank of China and other eight ministries and committees issued Certain Opinions on Promoting Bankcard Industry, and hold a national working conference for bankcards jointly, and put forward some policies, measures and working emphases for the development of bankcards systematically, which produced profound influences to the development of bankcards. Simultaneously, the marketization of bankcard business is increasing, competitive market system has been introduced to bankcard issuance, acceptance, machine arrangement and maintenance as well as charge pricing, and the system performs active roles in reducing trading costs, enhancing trading efficiencies and improving service qualities.
Bankcard Featuring Service for Peasant Workers
Currently, there are more than 100,000,000 peasant workers in total all ovdr China, and the amount remitted by peasant workers to their hometown is up to hundreds nf billions of RMB. However, the incomplete remittance system in rural areas, simplex remittance methods and long cycles make it difficult to meet peasant workers’ requirements of convenient, swift and safe capital transfer; as a result, a lot of peasants have no choice but come back to hometowns with large amounts of cash on them, and this is easy to raise some hidden problems about capital security and also induce many social and economic problems. Therefore, the People’s Bank of China and other related authorities organized and implemented the bankcard featuring service for peasant workers.
Bankcard featuring service for peasant workers is a kind of bankcard service specially designed for peasant workers, they can apply bankcards in the places where they work and deposit their cash into the cards and draw cash from the nearest rural credit cooperatives. In order to implement the strateges about work related to agriculture, farmers and rural areas as well as the construction of new socialistic countryside, in December 2005, the People’s Bank of China organized and developed bankcard featuring service for peasant workers in Guizhou Province. In July 2006, after concluding the experience in the trial units in Guizhou, the People’s Bank of China selected 11 provinces and autonomous regions and municipalities directly under the Central Government to promote the services by dividing them to be two batches, and they were Shandong, Fujian, Chongqing, Jiangsu, Hunan, Jiangxi, Sichuan, Shanxi, Yunnan, Henan and Guangxi. Till the end of 2006, all these provinces had completed their promotions successfully as planned, and the card-issuing banks that participated in the bankcard featuring service for peasant workers had expanded from the state-owned commercial banks and joint-stock commercial banks originally to all the card-issuing organizations later. After the promoting areas launched the bankcard featuring service for peasant workers, the promotions progressed smoothly, and transaction volume increased stably and the system operated steadily. Up to Dec. 31, 2006, the total accumulated transaction volume of the 12 provinces, autonomous regions and municipalities directly under the Central Government was 357,000 transactions, and the total transacted amount was as much as RMB 138,000,000.
During the course of promotion of bankcard featuring service for peasant workers, the People’s Bank of China tracked its developing situations closely, concluded promoting experience timely and issued Notice on Further Implementation of Bankcard Featuring Service for Peasant Workers by General Office of the People’s Bank of China, requiring all the participating banks/organizations to transfer the emphasis in bankcard featuring service for peasant workers to improving service qualities, so as to increase transaction volume , transacted amounts and increase the rates of successful transactions. Meanwhile, to further materialize the preferential treatments to peasant workers, a new standard for handling charges of bankcard featuring service for peasant workers has been practiced since Feb. 1, 2007, and the handling charge for every transaction of withdrawing by cardholder was reduced to 0.8% of the drawn amount from the former 1%, and the top charge limit for per transaction was reduced to RMB 20 from the former RMB 50.
Bankcard featuring service for peasant workers makes full use of the resources of rural credit cooperatives which scatter everywhere in rural areas; provides peasant workers with convenience in depositing and drawing money in different places; effectively solves the security problems about large amounts of cash on them when they return home from their workplaces; makes vast peasant workers enjoy convenient, swift and safe bankcard services; and this service are very popular among peasant workers and gains a lot of good appraisals from every field of the society while also obtains favorable social and economic effects. The promotion of bankcard featuring service for peasant workers performs an energetic role in boosting the construction of new socialistic rural areas, completing the construction of financial infrastructure in rural areas and improving financial service levels in countryside.
1.debit card means the cardholder is only able to draw and consume the money as much as he/she deposits before at most.
2.Credit card permits the cardholder to consume before payment within the credit limit granted by the card-issuing bank.
3.Quasi-credit card requires the cardholder to deposit a certain amount of imprest in the card-issuing bank in advance as provided for by this bank, and permits the cardholder to overdraw, when the balance in the account of imprest is not sufficient to pay, within the credit limit provided for by the card-issuing bank.
4.Credit card includes the credit card and quasi-credit card mentioned above.
5.The quantities of merchants and POS machines are provided by China UnionPay.