Growth of prepaid cards in China is expected decelerate along with other card categories due to uncertain economic conditions in the country. Chinese government’s strict regulations on prepaid cards to prevent corruption continued to have an impact on prepaid card transactions. However, prepaid cards in China are forecast to post steady growth over the next five years as further penetration of prepaid cards is expected in non-metropolitan cities, and categories such as transport cards and travel cards are expected to drive growth. PayNXT360 estimates, Chinese prepaid card market to post a CAGR of about 9% from 2016 to 2020, to reach USD 476.5 billion by 2020.
Prepaid transport cards are popularly used by commuters in first tier cities of China including Beijing, Shanghai, and Xian, for availing public transport services. The number of transportation cards per capita is significantly high in Tier 1 cities vis-à-vis Tier 2 or Tier 3 cities. PayNXT360 expects number of transport cards in circulation and transaction volume to post strong growth due to improvement of public transportation facilities in second and third tier cities, which will potentially lead to higher penetration rate of transport cards.
With high economic growth and increasing disposable income over the past decade, many Chinese citizens are travelling abroad for business as well as pleasure, and showing preference towards use of prepaid travel cards to be able to make purchases abroad and lock-in favorable exchange rates. To encourage tourism from Chinese travellers, countries such as Singapore, have launched prepaid cards especially targeted towards them. For instance, Alipay Wallet enables its users in China to purchase Singapore transit cards through the app, before they even depart from China.
Payroll cards is one of the card categories witnessing increasing demand from businesses. Banks in China issue payroll cards as part of the payroll services. Payroll services sometimes include value added services for cardholders such as wealth management, easy loan facility, and discount on fees for certain services.
Presently, Chinese prepaid card market is dominated by closed loop cards. PayNXT360 expect a shift in this trend over the next five years. We believe card issuers are likely to focus on introducing open loop cards in the market that offer innovative features, such as integration with mobile application, to attract customers and gain market share.
Want to gain deeper understanding of prepaid card dynamics in China?
Announcing the ‘Prepaid Cards Market Intelligence’ series – “China Prepaid Cards Business and Investment Opportunities – Market Size and Forecast (2011-2020), Targeting Strategies, Analysis of Business Trends, Consumer Attitude & Behaviour, Retail Spend, Market Risk, Competitive Landscape and Market Innovation”.
This report from PayNXT360 provides a strategic analysis of prepaid (pay before) cards, offering a wealth of insights to help companies understand this growing but quickly changing market:
- Market dynamics: Provides a comprehensive view on size and structure, industry dynamics, market trends, consumer attitude and behaviour, and competitive landscape in prepaid card industry.
- Open loop and closed loop: Provides market estimates and forecasts to assess opportunities in open loop and closed loop prepaid market segments. Details four essential KPIs – number of cards in circulation, numbers transactions, load value, and value of transactions.
- Prepaid card categories: Details market opportunities across 11 market segments in prepaid cards for the period 2011-2020 and identifies potential risks, and consumer adoption. Card categories include – Gift Cards, Teen and Campus Cards, General Purpose Reloadable Cards, Remittance Cards, Travel Cards, Business Expense Cards, Payroll Cards, Corporate Incentive Cards, Consumer Incentives, Government Benefit & Other Program Cards, Healthcare & Insurance Cards.
- Benchmarking and risk index: Benchmarks the prepaid card industry in the country with key global markets along with a risk assessment through PayNXT360’s proprietary Prepaid Cards Industry Risk Index (PCIRI).
- Consumer attitude and behaviour: Drawing from proprietary survey results, this report identifies and interprets key prepaid KPIs, including spend by age, gender, and income level. In addition, it provides an overview of how consumers are currently using prepaid cards across five key categories – travel, bill payment, retail spend, cash withdrawal, and P2P transfers. It also provides a breakdown by transaction size.
- Retail spend: Breaks down retail spend across 11 categories to provide detailed insights on consumer behaviour and changing dynamics of prepaid card spend.
- Gift cards: Drawing from proprietary survey results, this report provides in-depth analysis of opportunities in both open loop and closed loop prepaid gift card categories. Assesses consumer behaviour by type of consumer (retail and corporate), gifting occasion, card type (paper, plastic, digital), and market share by retail categories.
- Innovation and market strategies: Explores prepaid card strategies, including innovations across categories, competitive positioning, and new product launches.
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