The credit card market is rapidly developing in China. The number of card holders has exceeded 30 million. In the past three years, the annual growth rate reached 54%, and it is expected to retain an average annual growth rate of 30% over the next four years.

In a new report, Credit Card Systems in China, Celent examines the growth of the credit card industry. Although card saturation in big Chinese cities like Beijing and Shanghai has reached 60%, many second and third tier cities have yet to open up. Along with the expanding volume of cards issued, however, risks in usage are also increasing.

By the end of 2008, the biggest issuing banks of credit cards were the Industrial and Commercial Bank of China, China Merchants Bank, China Construction Bank, the Bank of China, and Bank of Communications. In the next four years, Celent expects that about eight banks will have exceeded 10 million credit cards issued apiece, and about 30 banks will have issued over 1 million cards. This means that more banks will need to upgrade their systems to support a bigger scale of operations.

Large banks in China usually use self-built credit card systems, while small and medium-sized banks often choose to outsource. At present, only one-third of credit cards use the outsourcing model, due to the relatively late entrance of small and medium-size banks and foreign banks into the Chinese credit card market. However, it is expected that more credit cards will be operated via outsourcing in the future.

"At present, China's credit systems are basically foreign-run. Banks in China accept foreign credit card systems more readily,” says Hua Zhang, analyst with Celent's Asia Research Group and the author of the report. “With increased profitability and the development of new technology, credit card systems will need to link with CRM and network systems to practice a more customer-centric business philosophy.”