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)
