While the plastic cash's effect on lubricating spending has proven powerful, a lot needs to be done by domestic banks and merchants, said Willie Fung, senior vice-president and general manager of MasterCard International China.

Nearly 10 per cent of China's 1.3 billion population are estimated to have become financially eligible to apply for credit cards last year, he said. That includes the 7 million that bought either a car or home in 2002, the 16.6 million who travelled abroad, and the 65 million households with an annual income topping US$1,200.

"So there's a huge group that are already eligible," Fung said in an interview on the sidelines of a MasterCard global conference call on Wednesday, marking its extension of official sponsorship of the 2006 FIFA World Cup in Germany and the 2004 UEFA European Championships in Portugal.

Fung said China's credit card market is still in the bud, and more effort is needed to register more merchants that accept cards, better cardholder education and improved services at card-issuing banks.

Competition between rival credit card firms in the Chinese market is still three to five years off and will not occur until more of a buyer's market emerges, said Fung. "What we are doing now is to help China do a good job of fostering its payment systems," he said.

Currently there is little competition between domestic card issuers. But banks are "starting to feel the pressure to compete," and foreign rivalry is set to heat up the market once overseas financial institutions operating in China are permitted to issue cards for international use, in accordance with the country's World Trade Organization commitments, the official said.

(China Daily March 14, 2003)