Chinese consumers spent more 56.9 billion yuan (US$8.3 billion or 6.1 billion euros) using their debit and credit cards during the week-long Chinese New Year, up 45% from 39.2 billion yuan during the same period last year, data from card company China Unionpay reveal. The holiday week started Feb. 14 and ended Feb. 19.
Consumers initiated most of the transactions at retail, catering and travel-services locations. They spent 15.7 billion yuan using credit cards that week, up 44% from 10.9 billion yuan a year earlier, while debit card users were still dominant, spending 41.2 billion yuan, up 45.6% from 28.3 billion yuan a year earlier.
More and more Chinese consumers are getting accustomed to using plastic thanks to the constant marketing efforts of all the banks, Hao Hongrui, an analyst at Beijing-based research firm Beijing DHD consulting Co. Ltd., tells PaymentsSource. However, banks should keep an eye on the growing use of credit cards because the country's credit-information system is still not fully developed, Hao warns.
The job market is still stagnant, and chances are card owners, especially migrant workers, would not repay the debt if they lost their jobs, she says.
China established a national credit-information system in 2006. Set up by the central bank, the People’s Bank of China, the system connects 23 banks located in major cities, covering only 640 million out of 1.3 billion individuals.
China UnionPay issued 420 million new debit and credit cards in 2009, up 40% from 300 million in 2007. Transaction volume on all the cards totalled 7.7 trillion yuan last year, up 67.4% from 4.6 trillion yuan in 2008, according to the issuer.