China CITIC Bank is teaming up with WeChat for new e-credit cards.
Shortly after Alipay—Alibaba’s payment service—announced its plan to offer its e-credit card with CITIC Bank this month, Tenpay—Tencent’s payment service—also announced its upcoming release of the WeChat e-credit card. Also backed by CITIC, this new payment option is aiming for millions of users.
There’s no doubt the two internet giants will be locked in a duel over virtual credit cards, and it’s not clear yet who will come out the victor. The application processes for both cards are similarly quick and easy; users can apply within the apps and get results within a minute. Both e-credit card holders can use them to shop online on shopping websites and offline at stores supporting QR codes scanning.
The launch of e-credit cards reflects China’s continuously evolving and maturing credit card market. According to the China Banking Association’s most recent report, by the end of 2012, 330 million credit cards were issued in China, up by 13.8 percent, and credit card sales reached 10 trillion yuan, up by 31.6 percent. A surge in the number of credit card holders along with rising wealth—or at least rising willingness toward luxury shopping—of the middle class has helped to stimulate luxury goods consumption in the country. Many Chinese luxury buyers earn mid-range incomes, meaning a lot of them are willing to spend wages of several months on luxury items, either living off instant noodles for weeks or paying with credit cards’ monthly installments.
WeChat’s user distribution suggests that 74 percent of the app users are young individuals aged 20 to 30; as for occupation distribution, 90 percent of the users are composed of young middle-class professionals and college students. The huge number of credit-card holders combined with WeChat users willing to spend means e-credit cards could have a significant impact on the Chinese luxury market—especially mid-range accessible luxury brands like Coach and Michael Kors.
Chinese shoppers with their favorite credit cards in hand could fire up luxury sales, and their favorite card might be the soon-released WeChat e-credit card for a number of reasons. The virtual card enables holders to use it without the hassle of holding on to a physical card. Additionally, many are already happily relying on WeChat for social interactions, so the credit card service added to it will only make the app a more attractive one-stop tool.