China currently has around 330 million bank cards in circulation, but only a very small number of real credit cards. Most cards in circulation are debit cards, although there is a high proportion of cards that require a deposit and have a limited overdraft capability.
With a five-year window to build real credit card franchises before international banks are allowed to do so in China, the country's banks are anxious to get started.
This, says Sam Flemming a consultant at Shanghai Huateng Software Systems, is why his company has partnered with PaySys, the world's leading provider of card management solutions, as preferred distributor of its VisionPLUS services for all mainland China customers. Huateng will also perform custom coding, application software support and customer care/help desk support.
Managing a credit card business is very complex and banks must be able to efficiently and effectively handle such tasks as new account processing, merchant acquiring, cardholder billing and management, promotions and co-branding. Developing such management systems themselves isn't really an option for Chinese banks, with development budgets being prioritised in other areas.
Although only a small number of local banks have so far introduced pilot programs for cards with real revolving credit facility, the infrastructure for the market to support credit cards has been gradually built up over the past few years.
Huateng was involved in setting up China's first consumer credit bureau last year, which enables banks to better make risk management decisions about which customers can receive credit cards. It has also played a role in developing debit card and payment networks across the country.
"We are very proud and excited to be entering into this agreement with PaySys," says Spencer Loh, president and CEO of Huateng. "The cooperation agreement brings together the best card management package in the world with the best and most talented software engineers in China in the payment and bankcard domains. We are confident that this combination will improve our client banks' service and profitability."
Peter L. Harrington, president of PaySys, says that partnering with a locally established company such as Huateng was the quickest way to get its products to the Chinese banks. "Huateng is a leading system integrator and solution provider in China. With 350 professional services engineers and a proven track record in the card related business in China, Huateng will be instrumental in helping us become a market leader in China."