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Credit Card Market in China 2011 - Company Profile

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Credit Card Market in China 2011 - Company Profile

  1. 1. Credit Card Market – ChinaSeptember 2011
  2. 2. Executive Summary Credit card market in China is has been demonstrating rapid growth and development over the past few years Market Credit card circulation in China stood at X mn cards in Jun 2011, y-o-y growth of Y% No. of credit cards in China is expected rise to Z bn by 20-- Drivers: Challenges: - Huge population and accelerating urbanization - Savings oriented consumer base - China’s young population - Bad debt continue to rise - Rising middle class and increasing income - Credit card misuse Drivers & E - Changing lifestyle and rising acceptance of credit cards - Barriers to entry Challenges L as a mode of payment - Alternative payment system P - Online payment on the rise - International comparison suggests growth in the M domestic market A Non-core businesses will further be outsourced Consumer management system Trends EMV payment standard cards S Alternative payment system Contactless credit cards Octopus cardsGovernment New measures to protect the credit card holders Initiatives Consequences faced for violation China Banking Regulatory Commission updates credit card rules to prevent credit card misuse Major PlayersCompetition Company 1 Company 2 Company 3 Company 4 Company 5 2
  3. 3. •Introduction•Market Overview•Card Payment Cycle•Drivers & Challenges•Trends•Government Initiatives•Competition•Key Developments•Key takeaways CREDIT CARD MARKET IN CHINA 2011.PPT 3
  4. 4. Global credit card market will continue to see rise in credit card usage and competition in the coming yearsOverview of Global Credit Card Market Share of Credit Cards in Global Market (20--) • Global credit card market exhibits intense Segment 1 Credit cards competition bn Segment 2 accounts foe about In 20--, nearly XX bn credit card transactions had taken b% of the total place 8 payment cards X • In 20--, Region 2 has overtaken Region 2 in credit 6 Y cards issue E 4 However, if we consider the P mn retailer cards in L Region 2 then is still by far the largest global market for 2 Z P credit cards 0 • Over the past few years, growth of credit and Total no. of payment cards debit card market in the Asia Pacific region has mainly been driven by China AM Global Market Share of the Credit Card Brands S Growth in number of credit cards in China had been b% per year on an average from 20-- to 20-- Brand 1 S7% Value of credit-card transactions increased by c% in the S1% Brand 2 same period Brand 3 S6% S5% • In 20--, Company 1 has surpassed Company 2 to S4% become the largest credit card brand in the world Brand 4 Nonetheless, Company 2executives derive consolation Brand 5 S3% from the fact that the majority of Company 2 cards, Brand 6 almost c%, circulate in China and Company 1 is still well Others S2% ahead in terms of usage and spending around the worldSource: CREDIT CARD MARKET IN CHINA 2011.PPT 4
  5. 5. …explosive growth in card usage and profitability over the coming yearsOverview of China’s Credit Card Market (2/2) Growth in Credit Card Turnover • Chinese credit card market still has ample scope for USD bn A% Y development and growth when compared with the 800 global credit card market 600 X Total Credit & Debit Card Transactions Country 400 (20--) E 200 A1 P bn A2 A3 Q bn R bn PL 0 2009 2010 Rise in Consumer Credit Card Spending AM Rise in Pretax Profit per Credit Card USD bn400300 M C% S N 30 20 USD B% B200 10 A100 0 0 2009 2010 2010 2025Source: CREDIT CARD MARKET IN CHINA 2011.PPT 5
  6. 6. Traditional stakeholders in the card payments cycle Goods & services > Card holders < Credit card statement < Credit card payment < Payment of credit card bill Issuing banks Merchants TPPs < Merchant discount rate Commission > Card receipt > < Settlement Acquiring banks TPPs Card receipt > < Interchange L E Card schemes MP SASource: CREDIT CARD MARKET IN CHINA 2011.PPT 6
  7. 7. Drivers & Challenges – Summary Drivers Huge population and accelerating Challenges urbanization Savings oriented consumer base China’s young population Bad debt continue to rise Rising middle class and increasing income Credit card misuse Changing lifestyle and rising acceptance of credit card as a Foreign entrants faces trouble to payment mode expand in Chinese credit card market Online payment on the rise International comparisons suggest growth in the domestic market CREDIT CARD MARKET IN CHINA 2011.PPT 7
  8. 8. Summary – Trends Non-core businesses will further be outsourced EMV payment standard cards Contactless credit cards Trends ` Octopus cards Consumer management system Alternative payment system CREDIT CARD MARKET IN CHINA 2011.PPT 8
  9. 9. Competition – Summary (1/2) Competition – Overview Credit Card Transaction Processor Market* • Although there is a positive outlook for the credit A4% card sector in China, but the global credit card Company 1 A3% A5% companies are dissatisfied with their limited access Company 2 to the Chinese market Company 3 Company 1 has a monopoly on processing card Company 4 A2% E A1% payments throughout the country Company 5 • Banks are in a persistent state of aggressive competition to increase their market shares PL M Banks make efforts like monitor new market demands, Transaction Processor Structure Comparison increase credit card varieties and expand service A extents to capture more customer in the market S Also issue dual-currency credit cards which is beneficial for most of the traders engaged in oversea business This has led to the usage of credit cards to become 120 100 80 Company 1 Company 3 Company 5 Company 2 Company 4 t1 r1 more convenient and faster than before 60 • As a result of all these efforts by the players in the 40 market, credit card market will see tremendous t2 r2 20 growth and expansion in future t3 t5 r3 r5 0 t4 r4 2008 2009Source: CREDIT CARD MARKET IN CHINA 2011.PPT 9
  10. 10. Competition – Summary (2/2) Top Credit Cards Issuers – Domestic Banks (2010) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 USD mn Units mn 13,505.25 A 63.66 8,051.88 L E B 34.77 Loans and Advances on Credit Cards 7,939.48 MP C 28.77 No. of Credit cards in 8,177.40 5,578.45 SA D E 27.95 24.48 Circulation 6,073.90 F 16.60 2,886.58 G 11.58Source: Capital IQ; Company Website Note: Industry may have other key players as well in the market 10
  11. 11. Major Transaction Processors in the Market (1/5) Company Snapshot: Company 1 Corporate Information Financial Performance Headquarters City 1 Revenue Revenue Net income USD bn USD bn Net Income Founded 18-- 30 X 5 U V W 4 E Products Credit payment card products 20 3 L 2 10 P Key People Person 1 – Designation A 1 0 0 M 2007 2008 2009 2010 A Business Highlights S • Company 1, together with its subsidiaries, provides charge and credit payment card products, and travel-related services worldwide Company 1 operates primarily outside the United States, with R offices in T countries Company sells its products and services to consumers, small businesses, mid-sized companies and large corporations through direct mail, on-line applications, targeted direct and third-party sales forces and direct response advertising worldwide • Various kinds of credit cards which the company provides are Type 1, Type 2, Type 3 and Type 4 • Bank 1 and Company 1 announced Card 1 for the first time in Mainland China in Aug 20-- • This card has all the functions and features of Y dual-currency credit cards with two accounts: RMB A/C and USD A/CSource: CREDIT CARD MARKET IN CHINA 2011.PPT 11
  12. 12. Thank you for the attentionCredit Card Market - China report is a part of Netscribes’ Financial Services Industry Series.For more detailed information or customized research requirements please contact:Gagan Uppal Jitendra PunjabiPhone: +91 22 4098 7530 Phone: +91 33 4064 6215E-Mail: gagan.uppal@netscribes.com E-Mail: jitendra.punjabi@netscribes.comAbout NetscribesNetscribes is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment &business research, business & corporate intelligence, content-management services, and knowledge-software services. At its core lies a truevalue proposition that draws upon a vast knowledge base. Netscribes is a one-stop shop designed to fulfil clients’ profitability and growthobjectives.Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India,Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is thesole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction. 12

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