Experts urge banks to speed up ATM, POS co-ordination
( 2002-01-15 10:57) (1)
China should speed up establishment of the "Golden Card" project, aimed at connecting domestic commercial banks' automatic teller machines (ATMs) with point of sale machines (POS) nationwide for customer convenience, experts said.
Huang Jinlao, an expert with the International Finance Research Institute under the Bank of China, said the central bank's recent decision to apply the "Yinlian" banking card in five major Chinese cities was a major breakthrough in spreading the nationwide payment system.
Chinese "Yinlian" bank card holders in Beijing, Shanghai, Guangzhou, Hangzhou and Shenzhen can withdraw cash from ATMs belonging to any bank and use only one POS machine to do the settlement starting January 10.
Until then, card holders are only allowed to use the ATMs or POS machines provided by a specified bank.
The "Golden Card" project has been in the works since 1993. It has been slow-going because large commercial banks are reluctant to let their ATMs and POS machines connect with others'.
Statistics from the central bank indicate that 55 financial institutions in China -- four State-owned commercial banks, 10 shareholding commercial banks, one post office, 29 city commercial banks and 11 rural credit unions -- had issued 330 million bank cards through June.
But only 1 per cent of all consumption volume nationwide was conducted via bank cards.
"Domestic financial institutions will have to speed up the inter-linking of different bank cards to improve their service because foreign competitors will be pouring in now that China is a member of the World Trade Organization (WTO)," said Niu Li, an economist with the State Information Centre.
Domestic banks need to further improve their service by issuing "real credit cards" to strengthen the consumption credit business, Niu said.
Otherwise, they may be handing the profitable business to foreign rivals, he said.
China's robust economic growth in the past years has yielded mounting demand for consumption credit, but the related service of domestic banks lags far behind.
The banking card for most bank clients in China is a type of deposit card that bans overdrafts.
"Domestic banks are extremely picky in granting credit cards," Niu said.
But the credit card service is viewed as a hot spot in the contest between domestic and foreign banks following China's WTO entry, he said.
China's annual lending interest rate is 6 per cent, while the overdraft interest rate is 18 per cent, which has made many foreign banks "drool" over the domestic credit card business, the economist said.
With their wide experience and sophisticated transaction systems, foreign banks have an edge over their Chinese counterparts in the credit card business.
But the small number of their outlets in China has put limits to their development, he said.
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