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MattP: China Merchants Beats Bank of China Online
Much has been written about the enormous potential of China’s e-commerce sector; however, until I switched banks, my own online shopping experiences had proved rather less positive.
While all of China's major banks issue China Unionpay debit cards – Unionpay, in which TelecCommunication Systems Inc. (Nasdaq:TSS) holds a 34% equity stake, is the country’s largest payment provider – and all online retailers accept Unionpay as a payment method, they do not accept Unionpay cards issued by all banks.
I previously had a Bank of China (3988.HK, 601988.SH) Unionpay card and, seeing as how BoC is the nation’s flagship international bank with more than 13,000 branches across China and dozens more overseas, assumed it would be golden for buying things online. Turns out, each website has its own list of supported banks, and Bank of China is missing from a lot of lists.
Most Chinese friends and colleagues tell me that they sign up for multiple bank accounts with different banks to increase the likelihood of their card being accepted by online retailers, but that kind of undermines the whole point of online retail being quick, easy and convenient.
In fact, China’s online payment landscape is less-than-straightforward. One of the most popular alternatives to buying online with debit or credit cards involves couriers dispatched to collect your cash, but this means waiting for hours for the delivery guy to arrive, and then spending 30 minutes directing him to your home or office when he inevitably takes the wrong turn.
Mobile phone payments via text message are another alternative, but carriers levy a significant handling fee on these kinds of transactions and this payment form is only suitable for small amounts.
There are third-party online payment services, such as Alibaba’s Alipay, which overtook PayPal in terms of users last week, but again my lack of supported credit or debit card would have required me to queue up at the bank to make a transfer. Some online payment services sell top-up cards at newsstands and small stores, but, when they are sold in denominations of RMB 100, I would need about 40 top-up cards to buy one plane ticket home.
So, when I was faced with the need to open a new bank account, I canvassed opinion as to which bank was the best for online transaction purposes and was given the same answer by almost everyone: China Merchants Bank (3968.HK, 600036.SH).
Taken by the consensus, I used my shiny CMB Unionpay debit card to make my first proper online purchase in China, my ticket home, and am happy to report that it was quick, easy and seemingly secure.
I entered my card number and mobile phone number on the website and 30 seconds later received an automated call asking me to enter my pin. Less than a minute later, I received a second text message, and an email, telling me that my payment had been successfully processed and that the transaction was complete. I then got a follow-up text message from my bank informing me of the transaction, with a number to call in case it turned out to be fraudulent.
Having finally been granted access to China’s online retail club, I am slowly starting to believe the hype. Online shopping in China is indeed convenient and very much a growth industry – provided you’re with the right bank.
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Matthew Plowright edits The China Report.
