Citi issues own credit cards in China

Citigroup Inc has made history by becoming the first Western bank to issue its own credit card in China without co-branding from a local financial institution.

Citi’s China credit cards are denominated in renminbi or U.S. dollars and accepted worldwide. China UnionPay, China’s largest electronic-payment network, will process payments inside China. MasterCard Inc. and Visa Inc. will handle cards internationally.

China requires all RMB-denominated credit card transactions to go through China UnionPay, the only domestic bank card organization and interbank association in China.

Despite the distinction of being the first Western bank to issue its own credit cards in China, Citi faces daunting challenges.

Because of interbank charges and restrictions on fees, Citi will need to issue some 20 million cards to be profitable in China, according to a recent survey by PricewaterhouseCoopers LLP. Citi’s small branch network could limit its ability to attain this goal.

Citi has only 50 outlets throughout China. With 130 branches, HSBC Holdings Plc has the biggest branch network of any overseas bank.

Citi and other foreign banks’ branch networks are dwarfed by Chinese lenders. Industrial & Commercial Bank of China Ltd, the world’s largest commercial bank, has over 16,000 outlets throughout China