Visa Cardholders set to bring US$25 Billion to Mainland China

Visa cardholders from around the world are set to spend US$25 billion in mainland China over the next five years. The forecast is based on the strong growth in spending by international Visa cardholders at merchant locations in China, which increased by more than 83 percent in the 12 months ended March 2005 to US$ 2.1 billion. Visa international card issuance in China also leapt by over 200 percent to 6.1 million cards over the same period.

Visa’s forecast echoes data released this month by the World Tourism Organization (WTO), which ranks China as the world’s fourth most popular tourism destination, after France, Spain and the United States. The WTO data also showed visitor numbers up 27 percent in 2004 from the previous year.

Impressive growth – but potential business being lost

While the growth in spending by visitors has been impressive, China is not unlocking the full potential benefit from the world’s ever-increasing desire to visit the country. High spending international tourists have long been accustomed to the convenience of paying by plastic, but the relatively low level of acceptance of international cards, particularly outside the prime tourist locations, means that potential spenders are too often frustrated and business is lost.

Speaking in Beijing, where Visa International is holding a major conference for its regional boards and international directors, President and CEO Christopher Rodrigues said, “Long before the 2008 Olympic Games, which will focus the eyes of the world on Beijing, visitors from around the world are showing their hunger for all that China has to offer. The surge in in-bound tourism is providing another growth engine for the domestic economy, but inefficiencies in the payment system have to be removed. Otherwise, potentially high-spending visitors will return home frustrated and Chinese merchants will continue to lose valuable business opportunities.”

Preparing to unlock the potential

The development of a modern, globally compatible payment industry is the prime purpose of Visa and its members in China. Under the terms of China’s accession to the World Trade Organization, under which the financial services sector will be progressively liberalized from the end of 2006, Visa members, whether Chinese or international, are currently prohibited from issuing renmimbi-denominated Visa cards.

Visa’s priorities today are therefore to support the expansion of the merchant acceptance base to meet the needs of in-bound tourists; to continue to issue international cards to meet the needs of the increasing numbers of Chinese traveling abroad; and, by continuing to share its technological know-how and best practices, to help ensure that the fast-developing industry is built on firm foundations.

This approach is very much in sympathy with a discussion paper, Suggestions on Promoting Bankcard Industry Development, jointly issued by nine Chinese government agencies earlier this month.

“The rapid growth in international tourism is one way in which China is building bridges with the world,” said Rodrigues. “The merits of some aspects of globalization may be open to debate, but in the world of travel and tourism, cardholders and merchants are united in wanting the convenience of fast, secure and certain payment. The message is clear: the world is coming to China with Visa cards and mobile phones in hand – the telephone works everywhere, but there’s still work to be done before rapid, secure payments can similarly be taken for granted.”

Powerful partnerships for growth - Beijing and beyond

Travel and tourism are cornerstones of Visa’s business – last year, based on Visa and China National Tourism Association (CNTA) data, 7.8 percent of spending by visitors to China was done using a Visa card in 2004 and this will increase as the number of merchants accepting Visa increases.

Visa enjoys strong relationships with the CNTA, with the Beijing Municipal Government in support of the 2008 Olympic Games, and with Hong Kong Disneyland.

“The Olympic Games are the world’s most prestigious sporting and cultural event. As a global partner of the International Olympic Committee, Visa is providing merchants and members with uniquely powerful means of promoting their businesses and driving tourism spend – but the payment industry has to be just as ready as all the other facilities.

The creation of a world-class payments system underpinning a vast modern economy would be one of the most valuable and lasting benefits of what many believe will be the greatest Games the world has ever seen. The benefits will extend well beyond 2008 and the city of Beijing,” said Rodrigues.

Christopher Rodrigues was in Beijing to host Visa International’s bi-annual All Board Meeting, a gathering of more than 300 leading bankers from over 60 countries and territories around the world. This is the first time that the meeting has been held in Asia.

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