(本文翻譯自 陳冲 簽帳卡 信用卡 支付不用卡 2022-09-14)
I received two publications in late August, one is the 40-year special issue of the National Credit Card Center, and the other is The Economist magazine (with special report about credit card organizations). Both talked about payment. Why I feel particularly impressed is because 40 years ago, I had translated the German masterpiece Zahlung und Zahlungssicherung for Chinese Business Administration Company, and 50 years ago, my master thesis also focused on payments in trade. That is, I have been concerned about payment for a long time in my career life and I deeply feel that payment is a thing that seems trivial but actually impacts people’s livelihood a lot.
Human are economic creatures. We have commercial activities, and thus payment. From international trade to retail transactions, from barter to cross-border currency settlement, all involve payment. With the advent of digital age, technology makes payment faster and safer while the threshold lower. It is easier to achieve the realm of disintermediation. Cardless, cross-channel payment, and even payments with digital currency will be all right for us.
The National Credit Card Center has been established for 40 years. In early days, since “monks from afar” opposed to credit cards, private companies issuing debit cards as payment instruments were required to clearly indicate that the cards had no credit function in 1974. Although commemorative special issue claims it to be the first credit card in Taiwan, the identity is however not that clear legally. I remembered when friends from China Trust Company (the predecessor of CTBC) came to promote the debit card, they still had to declare that it was not a credit card in case of breaking law. In 1988, domestic credit cards became legalized, and there was even a common brand under the Credit Card Center. Unfortunately, international ones like Visa and Master were approved to be issued in Taiwan in the 1990s and people loved traveling abroad then. Therefore, the domestic ones could only go to the dogs and people no longer remember them now. The 40-year special issue of the National Credit Card Center is actually the history of repeated repositioning of domestic credit card. Strictly speaking, even within Taiwan’s domestic market, there are still international brands rampant. It’s a little bit sad that we don’t have our own brand credit card. Seeing that the more than ten countries listed in the special issue have their own brand credit cards, the feeling grows even stronger. I believe it is somewhat related to the hasty opening. In such a complicated mood, I can’t help but think how would the 50-year special issue of National Credit Card Center (if there is one) describe payment at that time?
At the same time, I saw the title of The Economist article “Duopoly hurts consumers and retailers”, talking about the huge profits of international credit card organizations. Visa and Mastercard not only dominate 3/4 of US transactions but also be the most profitable companies (profit margin of 51% and 46%) around the world. The main income of these credit card platforms is fees charged for transactions, about 2-3.5% of the transaction value. In the US, there is almost no limit while the EU has capped such fees for credit cards at 0.3% and China 0.1%. These fees charged by the card-issuing banks are passed on, which is what The Economist calls “bad for consumers and retailers”. And those low-income households that do not have access to various discount plans bear the heaviest burden. A few days ago on Jul. 28th, the same Democratic senator who regulated debit interchange a decade ago, introduced the Credit Card Competition Act, which won support from cross-party lawmakers. The law will force banks to offer merchants the choice of at least two different card networks. These choices could not be the two biggest—at least one smaller network would have to be offered. Whatever the outcome is, although there’s still no conclusion under the wrestling of all parties, it shows that the huge profits of credit card platforms have become target of public criticism and non-credit card payments will eventually make a figure.
There are plenty of problems derived from payments, from open account to IOU, from debit card to credit card, and from card-based to app-based. If there is CBDC or DCEP in the future, there must be huge change in our daily payment life. On the eve of the Mid-Autumn Festival, PBoC issued a statement that in the digital age, the interconnection between E-Yuan and electronic payment tools must be accomplished on the basis of “unified currency”(the policy to standardize currency by the first emperor Qin Shi Huang around 210 BC). Consumers are allowed to scan a QR code for various kinds of payment access. PBOC plans to deploy more smart contracts for customized digital yuan payment. The development of finance inclusion will tell an entirely different story. The Central Bank and the FSC should not think it’s just crossing a bridge coming to it. We need to face the reality.
(Released on Appacus Foundation website, Sep.14th 2022)