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Insight - Kapronasia

Kapronasia will be hosting a webinar on August 8th, 2012 looking at China's Online Payments market. 

For more information on the webinar, please see the webinar description here or to register directly, go here.

The webinar is complimentary and will be looking at aspects of Kapronasia's soon to be released Online Payments Market in China report.

The World Economic Outlook Update published on July 16, 2012 announced that IMF revised its forecast for China’s GDP growth rate from 8.2% to 8.0% for this year and from 8.8% to 8.5% for next year. This down-rated outlook followed the recent announcement that China’s economy had grown at only 7.6% for 2012Q2, below the target of 8%. Recent news apparently drew a pessimistic picture for investors and consumers: risk of a hard landing is heightened.

In our opinion, however, the IMF revision could be a catalyst to refuel China’s economy. In fact, many analysts hold the view that the China’s authority is likely to announce more interest rate cuts and deposit reserve ratio reductions to further bolster the credit supply and reactivate the liquidity in the economy, which are essential to promote investment. As a result, consumer confidence will be maintained for the economic growth.

A recording of Kapronasia's Prepaid Cards in China webinar is now available for viewing on Kapronasia.com. To access the recording, click on the webinar link at the top of the website.

Recently, a WTO dispute panel, in response to the recent US complaint, said China is breaking the WTO rules by maintaining CUP as a monopoly supplier for the clearing of certain types of RMB-denominated payment card transactions. The specific areas where the panel determined that China had discriminated against foreign bank card suppliers are that 1) China requires all payment cards issued in China to work with the CUP network and to carry its logo, and 2) China forces all payment terminals to accept CUP network.

Trend 1: Fourth Round of Payment Licenses

If you remember from our previous commentaries, in 2011, the People’s Bank of China (PBOC) mandated that any company providing payment products or services be licensed in order to operate. This brought a much needed dose of regulation to what was previously quite an unregulated industry. Since then, 4 rounds of payment licenses have been approved, the last being on June 28th, when another 95 payment companies qualified to provide payment products and services in China.

According to public information on the official website of Jumio, this fast-growing payment and online ID verification company based in California will be announcing additional deals with customers in Asia later this year. This is a signal for the firm’s ambition and interest in entering the Asian online payment markets, among which China is of significant importance.

BlackRock recently announced the view that emerging stock markets such as China which have underperformed till early this year, are set to take off in the second half of 2012 thanks to the strong economic growth, slowing inflation, less volatility, and cheaper valuation.

 

According to PBOC (the People’s Bank of China), driven by the proliferation of online banking in China, in 2011 the total online payment transaction value reached 700 trillion RMB, with a 33% growth rate.

On June 16th, 2012, China Telecom, one of three mobile network operations in China, announced that its total mobile payment transaction value in 2012 researched 17 billion RMB, already exceeding the total amount of last year.

Recently Taiwan's Financial Supervisory Commission, the main financial regulator, said it had approved applications submitted by Bank of China and Bank of Communications to establish branches in Taipei. The banks will only be allowed to engage in limited business in the country, e.g. can only accept deposits higher than NT$3 million (US$100,350), only provide corporate loans. Further, the banks will need to receive approval from Taiwan's central bank if they wish to engage in f/x.

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