Overseas banks in China are launching yuan-backed debit cards to reach a retail banking market awash with US$2 trillion in household savings.
Three overseas banks - Bank of East Asia, Standard Chartered Bank and Citibank - have launched yuan debit cards since late May.
More banks are poised to join them - HSBC and Hang Seng Bank are busy preparing for the launch of their own debit card this year.
Hang Seng is preparing to set up its own yuan-backed debit card database in southern China and is considering launching the card after the Beijing Olympics. HSBC plans to offer its card before the end of the year.
Debit cards can help overseas banks to absorb deposits.
This is crucial for overseas banks, which are required to lend no more than 75 percent of deposits as late as 2011.
"The launch of debit cards means overseas banks can step out of our limited outlets on the Chinese mainland and reach to more clients with the plastic," said Cherry Zhou, general manager of consumer transaction banking of Standard Chartered China.
Andrew Au, chairman of Citibank (China) Co, said Citi not only viewed the debit card as a product but a platform to offer more integrated services to clients.
It doesn't come as a surprise to see the overseas banks developing strategic partnerships with UnionPay ?? China's sole national bankcard association to offer trans-bank switches on yuan transactions.
"We decided to join hands with UnionPay mainly because UnionPay has the widest payment system on the mainland," said Katherine Tsang, chief executive officer of Standard Chartered China.
Shanghai-based UnionPay has 520,000 automatic teller machines worldwide, 140,000 of which are in the mainland. More than 922,600 merchants on the mainland and 150,000 offshore accept UnionPay cards.
China is showing signs of lifting the requirement for yuan card issuance.
