Currently, few people in China use international bank cards due to cumbersome application procedures, but that should change quickly, according to Willie Fung, senior vice president of MasterCard International.

"Most Chinese bank-card issuers are moving their focus to international cards," said Fung, whose company is working with China Construction Bank to launch its first-ever international bankcard.

Currently, only the Bank of China, the Industrial and Commercial Bank of China and Guangdong Development Bank issue international cards on China's mainland.

Less than half a million international credit and debit cards are in use on the mainland, meaning the Chinese market has vast potential for long-term growth, said Fung, adding that the growing number of Chinese traveling abroad will provide the biggest boost to the market.

"More than 12 million mainland residents are expected to travel overseas this year, compared with 10 million last year," said Han Weiqiang, general manager of MasterCard International China. "The number will soar to 20 million by 2010."

Bank-card issuers can earn between 1 percent and 3 percent of the amount of money withdrawn by their card holders overseas, while payment companies earn a commission of between 0.1 percent and 0.2 percent on all transactions.

With more and more Chinese holding hard-currency bank accounts, applying for a card is getting easier. Some of the new cards are full credit cards, while others act more like debit cards with holders required to put down a deposit when applying for the card.

By the end of last year, the outstanding value of foreign currency-denominated bank deposits reached US$134.88 billion on China's mainland, up 5.2 percent from the previous year.

But the market still has many obstacles to clear.

"The Chinese have a habit of taking cash overseas when they are travelling," said Han.

Application procedures are still far more complicated in China than in developed countries.

It takes a BOC or ICBC international credit-card applicant about three weeks to get his or her card after submitting proof of financial status and salary.

Those who apply for a card at ICBC's Shanghai branch must be older than 25 with a monthly salary exceeding 2,000 yuan (US$241).

Meanwhile, the annual fees paid for international cards may prove too high for many locals.

The BOC requires its international credit-card holders to pay US$12 per year as commission fees and the ICBC demands 100 yuan, compared with an annual fee of 20 yuan for domestic-use credit cards.

(Shanghai Daily April 15, 2002)