The State Administration of Foreign Exchange (SAFE) issued new
foreign exchange bank card regulations yesterday. The new rules,
which will take effect on September 1, reflect market-driven
adjustments to policies on forex-denominated cards.
More controls are being placed on overseas transactions using
domestically issued cards, but at the same time regulators are
relaxing restrictions on the use of overseas bank cards on the
mainland.
Holders of cards issued by overseas institutions will for the
first time be able to obtain cash in foreign currencies from
designated banks.
However, the main principles of foreign currency card
supervision will remain unchanged. This means that circulation of
foreign currencies is still prohibited and only current account
transactions are fully convertible.
Regulators also set a cap of US$10,000 on the amount of cash
that can be obtained with domestically issued foreign exchange
cards in six consecutive months. This will enable closer monitoring
of the use of domestic bank cards overseas.
Restrictions will also be placed on the use of domestically
issued cards for trade deals and some specialized non-trade
services. Use of such cards is prohibited in gambling, cross-bank
transactions and transactions under the capital account.
A SAFE spokesman said that the authorities are generally very
supportive of the development of the domestic bankcard business,
given the convenience the cards offer and their role in curbing
illegal transactions.
The new regulation provides more detailed procedures for forex
and renminbi purchase and remittance by foreign currency
cardholders, and related repayment procedures.
Although China’s bank card business is still underdeveloped, it
has been expanding rapidly during the past decade. Foreign currency
cards have also become increasingly popular in recent years as more
Chinese people travel overseas.
As of the end of 2003, 10 Chinese banks had issued 2.6 million
foreign currency cards, according to SAFE. Recorded overseas
transactions (including both cash withdrawal and purchases) via
these cards totaled US$966 million last year.
Foreign banks are still prohibited from issuing their own cards
on the mainland, although some are getting around this by setting
up local partnerships.
Local banks are trying to improve their expertise and offer more
specialized services for card customers as they face increasing
challenges.
Shenzhen-based China Merchants Bank yesterday issued its
All-In-One Gold Card, China’s first debit card that can be used for
both domestic personal banking services and overseas cash
withdrawal and purchases.
(China Daily July 16, 2004)