Today, when I had dinner with Bruce, he asked the question about credit card. I had been following credit card usage in Shanghai for many years, and witnessed the transition from very hard to use to very popular today. However, I just realized that maybe Chinese will directly bypass credit card stage.
Something we may ignore is, credit card system was invented well before Internet, or even computer was invented. Since there is no way to trace usage of money in real time, people at that time either use “check”, or credit card – one for debit, and one for credit.
In China, people tend to use debit card protected with password, over credit card. They are essentially the same user experience in China. The computer system connects with the mainstream machine back in bank, and authorize in real time.
When that system is in place, why bother using credit card. PayPal type of services, or mobile payment will continue to evolve and provide better solution than credit card. Then why bother?
That also answered the question why Chinese people don’t use check. I never have a check book, and I believe no one in my close circle in China ever wrote a check.
It is the same for other things. Chinese have passed the whole generation of
– Fax
– Voice mail
– Taped movie
– Calendar
– Fixed line phones (in some rural areas).
We did catch up the CD, DVD, and VCD age, that is the reason when online downloading has been so convenient, most people still prefer buying DVD, because they have the infrastructure of DVD machine at home…
See? Technical trends always get dragged back by social trends.
Americans use credit cards because they don’t have to actually have the money in order to spend it. Then then end up paying 2 to 5 times as much because of the interest rates.
I prefer credit cards because, in the days when interest rates were more than 1 or 2% you didn’t have to pay for a month, so you saved extra money. Now a lot of credit cards give cash back (1% on most things, 2 or 3% on some) or airline miles, so there is a slight bonus. But it still costs the store money that they have to pay the credit card company and they pass that on to all of us. When the stores stop accepting credit cards, and only accept debit cards, then I’ll change–and maybe prices will go down a little.
Absolutely everyone I know in Hong Kong has a credit card. Actually, most people have several. And most people auto-pay their monthly credit card bills so there’s no need to pay interest. Plus, most credit cards let you build up points, like Cathay Pacific Asiamiles. I’ve gotten quite a few upgrades to business class thanks to my Visa
I’m not sure how things work in China, but how do people book things in advance or buy things on the Internet or overseas? (I’m not being sarcastic. I’m actually curious).
If I want to book overseas vacations, or concert tickets months in advance, my credit card is the only way to go. Same with having a book delivered from Amazon or sending flowers to my mom on Mother’s Day through an Australian florist.
A while back, I tried buying tickets for the new opera house in Guangzhou, and I just couldn’t do it from Hong Kong since they didn’t have credit card bookings. The PR person offered to take care of it personally for me, which was nice — but that wasn’t the point. If I was just an average person — and not someone with a connection there — what would I do? The lady who answered the phone at the ticketing counter said I’d have to go up in person, which made no sense. Nobody is going to cross the border just to pay for tickets. Or, she said, I could send cash, which I am afraid to do. Or I’d have to physically go to a Hong Kong bank counter and arrange a wire transfer to their account.
The infrastructure to support debit card has been widespread in America for close to 20 years. You can even buy food at most drive-through restaurants (McDonald’s, Burger King, KFC, etc.) from your car with a debit card and PIN. In many cases, debit cards at point-of-sale came before credit cards, and I think many Americans see debit card as the more “old-fashioned” way of purchasing.
People here prefer credit cards, in part, because of security. In the U.S., if someone steals your debit card, they can empty your entire bank account. With a credit card, your risk is limited to the credit limit of the card. Stolen cards are quite common here, so the risk mitigation is important. My wife’s card has been “skimmed” twice (which is where theives put an electronic layer on a cash machine to steal card information), and it’s easy for people to steal card information at point-of-sale. The thieves rarely get caught, and the penalties are not as harsh as they would be in China. Somehow I think it is far more dangerous to be a debit card thief in China. (Having said that, my credit card was stolen and used in China when I was there this February).
There is also the issue of prestige or status. In the U.S., using a vanilla debit card with a PIN is often associated with lower status. Using such a card may be a signal that the person is not creditworthy. In fact, many people use “debit” cards which are branded as a Visa credit card, and are used exactly like a credit card, but withdraw directly from the person’s bank account.
Most of my colleague in China has this philosophy… “If you have money, then you spent. If you don’t have money don’t spend”. For this reason, they are not fancy to spend on credit. Using debit card is directly deduct from their bank account.
Joyce, if the individual doesn’t have a credit card, they will ask a friend who has a credit card to help them buy things from oversea such as Amazon.com. Speaking from experience here :-)
In China, the shopping card such as Smart card, etc is popular. It is a prepaid card that you can use in some outlets. It has a prepaid x amount of money. This can avoid fraud which suddenly you found a big chunk of your money gone from account.
It was surprising to me that debit card actually requires much more technology than credit card, so it comes after credit card. While in China, people (well, at least me) has the perception that credit card is more advanced.
Interesting post, but I do not fully agree that China has passed the fax generation. It’s still an important channel for much of the daily business in China.
I even get “spam” to my fax on a daily basis. Mainly offers about cheap airline tickets or to buy “fapiao”.
What do people in China usually do instead of using voice mail? SMS? Or just making another call later?
@JH, voicemail was invented before mobile phone become available, and voice mail was a replacement for the operator and assistants to leave a message. Currently, SMS is a much easier way to reach someone asynchronously, or when you call someone’s mobile phone, the incoming call display will record the missing call automatically. In the mobile phone age, people don’t need voice mail.
In US the voice mail is still used frequently along with the use of the mobile phone and SMS. Many times when we try to call some one and fail to reach the person directly, we just leave the voice mail rather than make another call later or wait for the person to see the missing call message and call back. Most people here still feel that it is efficient and natural. I have noticed that people in China don’t like to leave the message at all. Instead they just try to make repeated calls until they reach the person even though a simple voice message can easily serve the purpose in many cases.
I wrote about voicemail before:
http://home.wangjianshuo.com/archives/20090428_why_people_dont_use_voice_mail_in_china.htm
In China, people don’t leave voicemail simply because people never check for it. People never check for it (if he has one) because no one leave it. It is the society deadlock, and it takes few generation for something like this to change. In US, people leave voice mail because people still leave it, and people still leave it because people know others will check it, although I suspect the frequency will be less than 5 years ago.
James E. Burkett is teaching in chengdu with a STD! He needs a clean health report as he has HERPES.Spreading it to children. He is not qualified in the USA to teach anyone,in fact hes running from paying bills in the USA. Give him several tests before with the public.