China's bank card business has entered a period of explosive development with 800 million cards issued to date and this momentum is expected to continue over at least the next five years, according to experts from China Unionpay.

"Since 1985 when China started to issue bank cards, the country has become the second-largest holder, following the United States which has about 850 million cards issued," said Lin Caiyi, deputy director of the Strategy & Development Department of China UnionPay - the sole national payment network for Chinese banks.

The credit card sector has also enjoyed rapid development, with the number issued jumping from 1.55 million at the end of 2002 to the current level of over 10 million, according to figures made public by Lin at the 2005 China Credit Card Business Forum held in Shanghai over the weekend.

"However, these cards are used very infrequently and the transaction volume generated from their use is very small, especially in terms of personal consumption," she said.

In 2004, these cards were used 5 billion times in China, involving total transactions of 26 trillion yuan (US$3,144 billion), 40 percent of this was generated by companies when paying employees and only 2.4 percent was generated by personal consumption.

In countries such as the United States, France and Switzerland, credit cards have become a convenient tool for payment, while in China, credit cards remain in their infancy, Lin added.

China now has 517,000 point-of-sale machines and 67,000 automatic teller machines, but these figures should be increased many times in order to make matters easier for card holders, according to Jia Lijun, vice-president and country manager of the China Office of American Express International.

Card issuers' major concern remains providing quality and reliable services to the existing card holders, rather than issuing more cards.

"The bank card business plays a significant role in Shanghai's construction into an international financial center and the government will work harder on this," said Cai Weijie, director of the Shanghai Municipal Golden Card Project Office under the Municipal Information Commission.

Shanghai had issued 49.02 million bank cards by the end of November 2004, including 1.6 million credit cards. The city is also building a three-square-kilometer Bank Card Industrial Park in its Pudong District, targeting bank card-related organizations.

(China Daily January 18, 2005)