China on track to be largest credit card market in the world
Dear Chinese college students: we're sorry about the credit cards.
China will likely overtake the United States as the country with the largest credit card market by 2020, MasterCard Inc. said in China on Sept. 10. The MasterCard payment network predicted that China will have roughly 900 million credit cards in circulation by 2020, overtaking the United States as the world's largest credit card market. At this point, China has about 230 million credit cards. MasterCard said in Shanghai that China's quick urbanization will drive the increase in the credit card market, The Wall Street Journal reported.
Considering the size of China's population, it shouldn't be so surprising. With more than 1 billion people, it's the largest country in the world and its economy recently surpassed Japan's as the world's second largest behind the United States. Bloomberg reported that China is the fastest-growing major economy in the worlds and that its citizens have $4.2 trillion in savings.
MasterCard predicted that the Chinese credit card market will likely see annual customer growth rates of 11 percent and a simultaneous 14 percent annual growth in the value of Chinese transactions until 2025. Such growth will create a large revenue jump, by as much as 20 times, The Wall Street Journal said. It added that Chinese profits related to credit cards could grow by 30 times.
Credit card companies now are working out how to break into this fast-growing market, Bloomberg reported. The financial news company said some other financial firms including HSBC Holdings Plc., American Express Co., and Citigroup Inc. and looking to develop dual-currency credit cards for the Chinese market, in an attempt to build their customer base in the country.
China's market also will be more stable than other markets, said MasterCard regional president Ling Hai. He contended that both the prudence of China's banks and its government policy make it a solid market for credit cards.
-Chris Meehan