Myth: Chinese Consumers Don’t Use Credit Cards

Whenever U.S. retailers think about establishing an eCommerce presence in China, we seem to hear the same statement: “But don’t Chinese consumers pay for everything in cash? I’ve heard Chinese consumers don’t use credit cards.”

This myth has been around for years, partly because it is (sort of) true. But of course, it’s also (sort of) false; and the way this myth is false is what really matters for retailers hoping to start eCommerce in China.

First, let’s make a distinction: when U.S. retailers say that Chinese consumers “don’t use credit cards,” they’re really saying that Chinese consumers don’t use “electronic payment methods”—i.e., payment methods that make online shopping easy for merchants and consumers. That myth, luckily, is (completely) false. So I’ll discuss both myths; that Chinese customers don’t use credit cards, and that receiving electronic payment is difficult in China.

Credit Cards in China

Let’s begin with the partial truth of this myth. Credit card use in China has been slow to take off, for a number of cultural and economic reasons. On the cultural side, Chinese consumers are notorious savers, which can be good for an economy, but bad for consumer spending. The household savings rate in China is estimated to be about 30% (Credit Suisse 2011); compare that to the US rate of around 0%, and you get the idea. This results in a thrifty consumer suspicious of institutional credit, and a relatively low need for credit. (When you save 30% of your income, who needs to put $20 on a credit card?).

Now for how this rumor is false: credit cards may face hurdles in China, but their use is growing rapidly in the mainland, and will continue to do so for some time. China’s central bank reports about 207 million credit cards in use as of June 2010 (Wall Street Journal 2010). Even back in 2008, a survey conducted by Forrester showed 40% of consumers in mainland China saying they used a credit card for an online purchase in the past three months (Ganguly 2008).

And the growth rate is staggering. The number of cards issued has grown 100% over the past three years, and the amount of card spending grew 100% in just the past 12 months (MasterCard n.d.). MasterCard predicts that card spending will continue to grow at an annual rate of 14% (MasterCard n.d.), and that by 2020 China will be the world’s largest credit card market (Wall Street Journal 2010).

In spite of these promising numbers, there are some important differences in the China credit card market US retailers should be aware of. First, the vast majority of credit cards in China are issued by a China UnionPay, which basically holds a monopoly. China also doesn’t allow foreign companies to issue cards using its currency (Tseng 2011). The big players US retailers are familiar with have a small presence in China.

Finally, while card use is growing, many eCommerce sites in China haven’t adopted credit cards as a method of payment—meaning Chinese consumers are not familiar with using it as a form of online payment. We looked at 10 of the largest Chinese eCommerce sites selling clothing and fashion products. Five of the 10 accepted Chinese credit cards as a form of payment; none took standard American cards (Visa, Mastercard, etc.). Forrester did similar work looking at 15 sites, and only six accepted credit cards (Evans 2009).

So here’s the bottom line on credit card use in China: It’s more prevalent than most think, and it’s growing. However, U.S. retailers should be wary of using it as a sole method of payment when starting eCommerce in China.

Electronic Payment Methods

Now let’s get to the better news: electronic payment methods other than credit cards are strong in China (think of services like PayPal). Also, these are relatively easy to use in your own eCommerce activities. These services can ease a retailer’s reliance on the complicated Chinese credit card scene, and may build trust with the Chinese consumer (Evans 2009).

One of these services, Alipay, has over 550 million registered users (Alipay n.d.). (Keep in mind that the entire U.S. population is around 300 million people.) Most Chinese eCommerce sites allow payment through multiple online methods, including Chinese payment services like Alipay, Tenpay, and Quick Money, and sometimes even PayPal. Alipay has an English website dedicated to helping US retailers integrate its services into their own eCommerce sites. Other services may not have English sites, so having employees who speak/read Chinese can help integrate with these other services.

This familiarity with online payment services presents a good opportunity for U.S. retailers. These sites allow U.S. retailers to circumvent some of the credit card difficulties, and give Chinese consumers a convenient service they are already familiar with.

So here’s the bottom line on electronic payments in China: It’s a strong industry, something Chinese consumers are familiar with, and gives US retailers a way to provide convenient payment methods that benefit both retailer and consumer.


Setting up electronic payments for eCommerce activities in China is doable, and will become easier each year. Chinese consumers will continue to adopt credit cards, and Chinese electronic payment services will likely begin to cater more to U.S. companies, further streamlining the integration process. For U.S. retailers who put in the effort, accepting online payments through credit cards and other services is a viable option.

Next Steps

Pure-play eTailers who have given up on entering China may want to revisit their plans. Many entrance difficulties—including, of course, online payments—have diminished over the past few years, making entrance feasible.

Multi-channel retailers should discuss the feasibility of opening a Chinese eCommerce site with their eCommerce teams. Many of the old barriers are falling away, and opening Chinese eCommerce should be part of every retailer’s strategic plan.

Retailers who have been selling product through Chinese sites like Taobao (similar to Amazon in the US) should consider opening their own eCommerce operations. This will become even easier in the years ahead, and laying the groundwork now will give retailers the advantage in the future.

All types of retailers should consider establishing capabilities with the Chinese market, either partnering with consulting companies (such as Acquity Group), or by hiring employees who speak and write Chinese and are familiar with the culture.


Alipay. (accessed May 31, 2011).

Credit Suisse. Emerging Consumer Survey 2011. January 2011.

Evans, Patti. Online Chinese Retail: Assessing Opportunities In Chinese eCommerce. January 20, 2009.

Ganguly, Dia. Growing Payment Options Advance eCommerce In Asia Pacific. May 16, 2008.

MasterCard. (accessed June 1, 2011).

Tseng, Nin-Hai. February 14, 2011. (accessed May 31, 2011).

Wall Street Journal. September 10, 2010. (accessed June 1, 2011).

Wang, Diane. Practical eCommerce. April 12, 2010. (accessed May 27, 2011).

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