Expats are breaking the yuan credit card barrier
Jadeine Whiteside, a Fijian fashion designer living in Shanghai, wanted a local credit card to assist her website business and PayPal transactions. But banks repeatedly turned her down.
“They just told me foreigners cannot get credit cards in China,” she said. “I have had to share a credit card with my mother.”
For expats working here, it’s a shared frustration. Many have tried and failed to get yuan credit cards.
For one thing, card applicants need to produce a lot of paperwork, such as proof of property ownership, employment contracts and tax receipts. The process is long and slow, and it usually doesn’t end up with credit card approval.
Worse, many expats have found that credit cards issued by banks in their home countries don’t work in Shanghai, or, if they do, cardholders are slapped with foreign-currency exchange fees. It is also problematical having to repay credit card debt with foreign currency.
But change is coming, albeit slowly. Now, the Bank of China’s Shanghai branch is offering yuan credit cards to foreigners with Type A work permits, which are given to those at the top end of badly needed foreign professional classes.
The Shanghai Administration of Foreign Experts Affairs recently joined hands with the bank to launch a special “fast-track” pilot program to streamline credit card applications for high-end foreign talent in the city.
The Bank of China, located in the historical building at Bund 23, is an ideal partner for the program because it is the nation’s most international bank.
According to city records, there are nearly 90,000 foreigners in Shanghai with work permits. Of those, about 13,000 are Type A permits.
To date, 30 foreigners have successfully used the program to obtain local credit cards.
Feng Yanrong, senior manager of the bank’s banking department, admitted to Shanghai Daily that local banks are cautious about issuing credit cards to foreigners because expats usually live here temporarily, which presents a repayment risk.
“If foreigners leave China and fail to repay credit card debt, it’s very difficult or sometimes impossible for us to collect,” she said.
Feng recalled one foreign client, who was chief executive of a luxury hotel in Shanghai, who left China when his employment contract expired and forgot to pay off his credit card debt.
“Fortunately, the hotel is also our client, and its staff helped us to contact him overseas,” said Feng.
“But it still took us 18 months to get repayment.”
In the past, she said, her bank has issued credit cards to only a handful of foreigners, mostly top executives who are considered small risks.
“But now, after talking with the administration of foreign experts affairs, we decided to focus on high-end professional talent and improve our quality of service to them to make our city more foreigner-friendly,” she added.
The pilot program has streamlined the application form to require only a valid passport, documentation of a residency permit valid for a year or more, and a Type A work permit.
The application process has also been shortened to about two weeks.
Andres Ruiz-Linares, 57, a professor of genetics at Fudan University, was lucky enough to be the first to receive a yuan credit card from the bank under the program.
He said he came to Shanghai to work on a long-term basis last April and plans to reside here about nine months every year. Yuan credit card debt is easy to repay because his salary in yuan is automatically deposited in a local bank account.
He was lucky. When he approached the Bank of China in June to ask for information about obtaining a local credit card, he was told he was eligible for the new program because he holds a Type A work permit. He was issued a card in early July.
“I have used it for shopping and online payments,” Ruiz-Linares said. “It works great, and I like it very much.”
He said there are also online, text message banking facilities that allow him to see his credit card account and monitor how close he is to its limits. His regular bank account is now linked to his credit card, facilitating payments.
“I use online, mobile phone and SMS bank services, which all work extremely well,” he said. “They facilitate all transactions, while maintaining security.”
No such luck for Fijian Whiteside. She holds a Type B work permit and is ineligible for the program.
Feng said the bank will monitor the trial program before deciding whether to expand it to other classes of foreigners.
The Shanghai Administration of Foreign Experts Affairs said it, too, will track the new program and decide later whether to expand it to other banks.