Credit Card Companies to Welcome China’s Plan to Open Market for Credit Transactions
Mastercard and Visa is welcoming China’s plans in opening up the market for clearing domestic bank card transactions as the company stand to gain access to a much larger and growing market that is said to be worth US$1 trillion a year. As China lags to such countries in spending credit, the Chinese habits are changing fast and is increasingly swiping credit cards to satisfy their appetite for consumer goods.
The State Council and the Chinese Cabinet that foreign firms that meet the criteria are allowed to create their own caring companies but no details have been released yet. Visa one of the world’s biggest credit and debit company is welcoming the move saying that they are looking forward to see the details and to work with the people in China and figure out what else is needed to be done and to participate in the market as they believe they can add more value.
Household debt in China totaled 37 percent of their gross domestic product by the end of July compares to 81 percent in the U.S. but known for being thrifty the Chinese spending habit is changing fast. The total outstanding credit card balances in China is less than 10 percent of its household debt, where a third higher by the end of June compared to a year ago. And according to the People’s Bank of China the amount outstanding for every card has increased by two thirds in just two years.
Mastercard the second largest credit and debit company globally is also welcoming the opportunity to expand in China and will continue to closely monitor and look forward to compete with domestic businesses in China.