China is taking even more drastic steps to curb capital outflows plaguing the economy. The People’s Bank of China has declared they will no longer support dual-brand cards. Transactions conducted by foreign bank card associated without Chinese licenses will be considered illegal within the country’s borders. Not a positive development for the economy, but another reason why Chinese people should look closer at alternative solutions such as Bitcoin.
The End of Joint Bank Cards In China Is Here
To put this news into perspective, the ban would apply to payment cards sporting two different logos. For example, a UnionPay card also showing a Mastercard or Visa logo would be a violation of the new law. That is, assuming the foreign bank card association has no domestic bank card clearing license. It is expected mainly prepaid providers will be affected by this decision, whereas major card issuers should be safe from harm.
Interestingly enough, joint cards have been available in China since 2003. Thanks to the efforts of UnionPay and foreign bank associations, these cards quickly become a favorite commodity among consumers and business people. Most people use this card for abroad expenses through the Unionpay channel. So far, over 200 million joint cards have been issued, compared to only just over 10 million regular single-network cards.
No new virtual duel-brand cards will be issued to consumers once they expire. Existing card will not become illegal overnight either, thankfully, but it is only a matter of time until they are phased out completely. Once such a card expires, the card holder will receive a single network card instead. A convenient process, but it highlights a large fear among Chinese regulators of how money is leaving the local economy.
Customers and investors who still want their dual-brand payment cards will have to look for new options in the future. Bitcoin debit card providers will be able to issue these cards, albeit shipping them to China will become a struggle. For businesses such as Xapo, Wired, and others, this is anything but good news regarding their international expansion plans.
Even though this ban will affect millions of users in China, it remains to be seen whether or not consumers will look for alternative solutions. Even if they were to do, it is doubtful will gain more traction all of a sudden. Incumbent payment systems have a firm grasp on the market, whereas Bitcoin is often regarded as nothing more but an investment vehicle.
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