China's Credit Card Business (operation) Mode And Risk Prevention Research

In the developed countries, the operating mode of credit card business is comparatively mature, and offers many experiences for us to learn from. It has been more than 10 years since credit card business entered the financial field of China. Within this period, all the credit-card-issuing institutions have accumulated some managing experiences, and the two operating modes of credit card, with the four state-run commercial banks and medium-small shared banks as the representatives, have taken shape. However, tracing the history of credit card business in China, we can see that the development of credit card business is far below our expectation. It is urgent that we make rational choice concerning the operating mode of credit card business on the basis of foreign credit card managing modes and domestic developing condition for credit card business. Based on SWOT analysis of the existing two operating modes in China, this author advances an operating mode of credit card agent company. To be more specific, in the organizing system of credit card managing, he develops the conception of credit card managing body with credit card as its form; in the execution of credit card business, he suggests that credit card business be divided into the two parts of kernel business and non-kernel business. On one hand, the credit-card-issuing company is responsible for the kernel business, like the analysis of the information of the customers and the research into the developing strategies. On the other hand, the agent company is responsible for the non-kernel business, like issuing credit cards and seeking prospective customers. With this new mode, the operating cost will be lowered, the efficiency will be improved, and the credit card company will earn much profit. The operating mode of credit card company will be victimized by the compact oftraditional banking institutions, the backwardness of the construction of domestic personal credit assessing system, the possible risks brought about by the re-positioning of the services of credit cards, and the external risks resulting from the participation of foreign financial organizations in domestic credit card market. Considering these prospective risks, this author proposes precautions against the possible risks involved in the operating mode of credit card company. First, starting with the domestic construction of personal credit assessing system and the regulation of the operation of credit card company, the government provides a good environment for the domestic development of credit card business. Second, departing from self construction and balancing the interests relationship between different rivals, credit card companies promotes their resistance the possible risks involved in credit card business. Finally, domestic credit card companies cooperate actively with foreign financial institutions so as to minimize the risks involved in the operating mode of credit card business.