Overall Performance of the Payment System in the Third Quarter of 2008

In the third quarter of 2008, the payment system performed in a safe and efficient manner, promoting stable and relatively fast development of the national economy, and featuring zero accident and zero customer complaint during the Olympics. Non-cash payment instruments[1]-based business edged up in terms of transaction volume but slid into the negative zone in terms of transaction value for the first time ever; business volume of the payment system grew at a considerably slower pace; the number of RMB settlement bank accounts grew steadily.

1.Non-cash payment instruments

In the third quarter, non-cash payment instruments-based payment edged up in terms of transaction volume but slid into the negative zone in terms of transaction value for the first time ever. Specifically, bankcard-based payment grew appreciably in volume but the value declined by a large margin; the decline in notes payment volume moderated, and the growth of value decelerated greatly; remittance transaction volume grew faster than before, but the value growth decelerated substantially.

In the third quarter, a total of 4784.8887 million transactions were processed nationwide using non-cash payment instruments, up 20.5 percent year on year, and the value registered 157.27973 trillion yuan, down 8.3 percent year on year. Among this total, there were 222.7038 million notes-based transactions worth 62222.

628 billion yuan, accounting for 4.7 percent and 39.6 percent of the total respectively; bankcard-based transaction volume posted 4363.8962 million and the value 32443.904 billion yuan, accounting for 91.2 percent and 20.6 percent of the total respectively; remittance, authorized collection and other transactions registered 198.

2887 million in volume and 62612.598 billion yuan in value, accounting for 4.1 percent and 39.8 percent of the total respectively.

(1)Notes

The decline of notes business volume moderated, and the growth of value decelerated greatly, with the share of economically well-off regions edging down. In the third quarter, notes business volume registered 222.7038 million worth 62222.628 billion yuan, down 8.1 percent and 3.2 percent respectively year on year, deceleration of 13.5 and 7 percentage points respectively from the same period of the previous year. On average, 2.4207 million transactions [2]whose value stood at 676.333 billion yuan were processed each day. The volume and value of notes-based transactions in six provinces (municipalities) including Jiangsu, Guangdong, Shanghai, Zhejiang, Beijing and Shandong accounted for 46.4 percent and 65.5 percent of the total notes business nationwide respectively, representing decrease of 0.3 and 0.6 percentage points respectively from the second quarter.

The share of state-owned commercial banks notes business in the total notes business declined in volume but increased in value, the share of joint-stock commercial banks climbed up both in terms of volume and value, and that of policy banks declined significantly in value. In the third quarter, state-owned commercial banks processed 136.4723 million notes transactions valued at 45993.307 billion yuan, accounting for 61.3 percent and 73.9 percent respectively of the total, an acceleration of 3.7 percentage points and a deceleration of 6.4 percentage points respectively; joint-stock commercial banks processed 21.3319 million notes transactions valued at 7608.618 billion yuan, accounting for 9.6 percent and 12.2 percent of the total, posting acceleration of 0.6 and 0.8 percentage points respectively from the same period of the last year; 468,500 notes transactions worth 362.967 billion yuan were processed by policy banks, accounting for 0.2 percent and 0.6 percent of the total respectively, with the transaction volume at par with that of the last year and the value decelerating by 8.4 percentage points from a year earlier.

The decline of check business volume moderated, and the value reversed its growth path and fell. In the third quarter, 217.2214 million checks were processed worth 57956.993 billion yuan, dropping 8.0 percent and 2.9 percent respectively year on year, and registering deceleration of 13.9 and 6.4 percentage points from the same period of the last year respectively. The daily average volume of check transactions recorded 2.3611 million with value of 629.967 billion yuan. The average value per check transaction grew at much slower pace. The check business averaged at 266,800 yuan per transaction, posting a year-on-year increase of 5.6 percent and a deceleration of 26.9 percentage points from the same period of the last year. The volume of check transactions in the six provinces (municipalities) including Beijing and Shanghai fell faster than that of other regions, but the total value continued to climb; the total value of check business in other regions had a steep fall. In the third quarter, the check transaction volume in the six provinces (municipalities) posted 98.9551 million (down 12.9 percent year on year) worth 37475.926 billion yuan (up 3.7 percent year on year), accounting for 45.5 percent and 64.7 percent of the total respectively. The improved IT system has bettered management over irregular checks and reinforced the crackdown on irregular checks. In the third quarter, in an effort to fight against dishonored checks and checks whose signature is different from the authorized signature, 78,700 irregular checks were detected with value of 6.565 billion yuan, down 17.2 percent and 6.8 percent year on year, accounting for 0.04 percent and 0.01 percent of the total respectively.

Commercial paper business continued to increase with decelerated growth in transaction volume but accelerated growth in value. In the third quarter, 1.9638 million commercial paper transactions were settled worth 1756.739 billion yuan, up 14.4 percent and 13.5 percent respectively year on year, representing deceleration of 3.4 percentage points and acceleration of 6.5 percentage points respectively from the same period of the last year. Among this total, there were 1.9094 million transactions of banker s acceptance bill worth 1608.947 billion yuan, representing year-on-year growth of 14.0 percent and 12.4 percent respectively. The regional gap of commercial acceptance bill business widened, with more businesses concentrating on comprehensive coastal economic zones[3]. About 46,400 transactions of commercial acceptance bill business were processed in the northern, eastern and southern economic zones worth 134.097 billion yuan, accounting for 85.1 percent and 90.7 percent of the total respectively, and representing slight hike compared to the figures in the second quarter. Joint-stock commercial banks dominated the commercial acceptance bill market and their business volume grew rapidly. In the third quarter, joint-stock commercial banks processed 33.1 transactions of commercial acceptance bills worth 117.208 billion yuan, up 69.4 percent and 44.8 percent year on year, accounting for 60.9 percent and 79.3 percent of the total.

Banker s draft and banker s promissory note business continued to slump. In the third quarter, 2.065 million banker s draft transactions were processed worth 1033.749 billion yuan, representing a year-on-year decrease of 26.0 percent and 22.5 percent respectively. About 1.4495 million transactions of banker s promissory note business were processed valued at 1444.741 billion yuan, down 10.0 percent and 13.8 percent respectively year on year.

(2)Bankcards

In the third quarter, bankcard issuance continued to grow, with debit card issuance that dominated the issuance structure falling as a share of the total and issuance of credit cards gathering pace. As of the end of the third quarter, 223 card issuers became China UnionPay members, 10 more than that at the end of the second quarter. Among this total, there were 185 domestic card issuers and 38 foreign issuers. As of the end of the third quarter, 1728.8969 million bankcards were issued in cumulative terms, up 18.8 percent year on year, representing a deceleration of 10.3 percentage points from the same period of the last year. Specifically, 1597.4402 million debit cards were issued, up 15.8 percent year on year, representing a deceleration of 11.7 percentage points. Debit cards issued accounted for 92.4 percent of the total, down 2.4 percentage points compared to that in the previous year. About 131.4567 million credit cards were issued, posting year-on-year growth of 72.9 percent and representing an acceleration of 5.9 percentage points. In the third quarter, the ratio of debit card issuance versus credit card issuance was about 12.15:1.

The growth of credit card issuance by state-owned commercial banks remained faster than that by joint stock commercial banks. By the end of the third quarter of 2008, state-owned commercial banks issued accumulatively 59.6857 million credit cards, up by 13.1 percent over the end of the second quarter.The joint stock commercial banks issued accumulatively 48.5689 million credit cards, up by 11.9 percent over the end of the second quarter. China Postal Saving Bank started to issue credit cards in 2008, and issued accumulatively 5,500 credit cards.

The credit extension capability of credit cards continued to improve, promoting the rapid development of consumer credit. By the end of the third quarter of 2008, the outstanding credit line of credit cards stood at 891.047 billion yuan, up 70.9 percent over the same period of the last year and amounting to 3.5 times as much as that of the same period of 2006.

Bankcard usage environment kept improving, while still lagging behind the developed countries. By the end of the third quarter of 2008, the inter-bank bankcard payment system covered 1.0496 million merchants, 1.6387 million POS machines[4], 158,300 ATMs, up by 127,000, 189,700 and 10,000 more than that at the end of the second quarter. At the end of the third quarter of 2008, the number of bankcards for each ATM was 10,900 and the number of bankcards for each POS machine was 1055. At the end of 2006, the number of bankcards for each ATM in the U.S., France and Germany was 4023, 1967 and 2204 respectively, and the number of bankcards for each POS machine was 307, 159 and 205 respectively.

The increase of volume of bankcard-based transactions has contributed to marginal rise of the transaction volume of non-cash payment instruments. In the third quarter, the volume of bankcard-based transactions stood at 4363.8962 million, with the total value of 32443.904 billion yuan. The transaction volume increased by 24.7 percent over the same period of the last year, an acceleration of 4.7 percentage points; and the total value increased by 4.1 percent over the same period of the last year, a deceleration of 58.8 percentage points. Among the total, 867.3549 million transactions were cash deposits, increasing by 10.3 percent year on year, and the total value was 8462.349 million yuan, decreasing by 27.6 percent over the same period of the last year; 2192.0548 million transactions were cash withdrawals, with the total value of 8813.413 billion yuan, increasing by 18.7 percent and 13.2 percent respectively over the same period of the last year; 713.1082 million transactions were related to consumption, with the total value of 1023.236 billion yuan, increasing by 60.1 percent and 27.9 percent respectively over the same period of the last year; 591.3783 million transactions were fund transfer, with the total value of 14144.906 billion yuan, increasing by 40.7 percent and 29.9 percent respectively over the same period of the last year.

Bankcard-based consumption increased rapidly, with the bankcard penetration rate[5] of 25.7 percent. In the third quarter, the bankcard-based consumption maintained the momentum of rapid growth, with the bankcard penetration rate of 25.7 percent, up 1.8 percentage points over the second quarter. Consumption value per transaction fell and consumption value per card increased. In the third quarter, consumption value per bankcard and consumption value per transaction stood at 592 yuan and 1435 yuan respectively, with the former increasing by 0.7 percent and the latter decreasing by 8.7 percent over the second quarter.

The bankcard service tailored for migrant workers increased by a large margin. By September 30, 45000 outlets of rural cooperative financial institutions at county or below-county level within the jurisdiction of 17 provinces (municipalities and autonomous regions) including Guizhou Province and Hunan Province, and 15000 outlets of China Postal Saving Bank in 31 provinces (municipalities and autonomous regions) had launched bankcard service tailored for migrant workers. In the third quarter, the volume of withdrawals via migrant worker bankcards stood at 1545300, with the total value of 1.944 billion yuan, rising by 232.87 percent and 235.19 percent respectively over the same period of the last year. Specifically, the volume of withdrawals with migrant worker bankcards handled by China Postal Savings Bank stood at 39600, with the total value of 40 million yuan, accounting for 2.6 percent and 2.1 percent respectively of total withdrawals of tailored bankcard service for migrant workers. China Postal Savings Bank began to provide tailored bankcard service for migrant workers, extended the service, introduced competition mechanism and thus promoted the stable development of such service.

(3) Means of Settlement

The volume of remittance and authorized collection decreased notably. In the third quarter, the volume of remittance and authorized collection registered 198.2887 million, falling by 13.6 percent over the same period of the last year, representing a deceleration of 25.9 percentage points, and the total value was 62612.598 billion yuan, dropping by 17.6 percent over the same period of the last year, representing a deceleration of 94.7 percentage points. Among them, the volume of remittance registered 189.3593 million, up 12.6 percent over the same period of the last year, representing an acceleration of 9.5 percentage points; and its total value posted 60658.733 billion yuan, down 17.5 percent over the same period of the last year, representing a deceleration of 99.4 percentage points.

Commercial banks and joint stock commercial banks witnessed the decline of remittance volume, leading to large margin fall of the total value of remittance. Specifically, the total value of remittance of the state-owned commercial banks stood at 32164.374 billion yuan, accounting for 53.0 percent of the total remittance, marking a year-on-year reduction of 11.7 percent; the total value of remittance of joint stock commercial banks registered 14947.599 billion yuan, accounting for 24.6 percent of the total, marking a year-on-year decrease of 23.5 percent.

2. Payment System

In the third quarter, the growth of payment system slowed down greatly. The volume of large-value payment system (LVPS) and intra-bank payment system of banking financial institutions accounted for the dominant proportion. The volume of bulk electronic payment system (BEPS) developed at a relatively faster pace, with the volume of inter-bank bankcard payment system growing very rapidly, whereas that of local clearing system continuing to fall. In the third quarter, the volume of transactions handled by the payment system registered 1887.3501 million, up 27.3 percent over the same period of the last year, a deceleration of 17.7 percentage points; and its total value registered 268129.896 billion yuan, up 11.8 percent over the same period of the last year, a deceleration of 50.4 percentage points.

In the third quarter, the total value of funds transferred through LVPS, BEPS, intra-bank payment system of banking financial institutions in the eight economic zones registered 202566.285 billion yuan, down 2.1 percent over the second quarter. The fund flow of the comprehensive economic zones in the northern and eastern coastal areas edged down, although still accounting for a comparatively large proportion of the total fund flow, while the fund flow in comprehensive economic zones in the north-western area, middle reaches of the Yellow River and the north-eastern area enhanced. The total fund inflow of comprehensive economic zones in the northern coastal area and southern coastal area stood at 127223.425 billion yuan, accounting for 62.8 percent of China s total fund inflow; the total value of fund outflow registered 127062.090 billion yuan, accounting for 62.7 percent of the nation s total fund outflow. The fund inflow of comprehensive economic zones in the north-western area, middle reaches of the Yellow River and the north-eastern area stood at 19793.553 billion yuan, accounting for 9.8 percent of total fund inflow, while the fund outflow in this area stood at 20254.577 billion yuan, accounting for 10.0 percent of the nation s total fund outflow.

(1) LVPS

The growth of transactions processed by LVPS slowed down greatly. In the third quarter, the transaction volume dealt by LVPS registered 55.6237 million, increasing by 19.9 percent over the same period of the last year, a deceleration 9.9 percentage points; and the total value registered 160916.072 billion yuan, rising by 13.6 percent over the same period of the last year, a deceleration of 91.7 percentage points; the average transaction volume per day registered 855,700, 32000 more than that in the second quarter, namely 3.9 percent over the second quarter, and the total value was 2475.632 billion yuan[6], down by 33.062 billion yuan, namely 1.3 percent over the second quarter.

In the third quarter, China Government Securities Depository Trust and Clearing Co. Ltd handled 9300 clearing transactions through the LVPS, involving 1327.062 billion yuan, with DVP settlement volume per day registering 20.416 billion yuan; among them, the average volume of foreign exchange transactions stood at 800, with the total value of 833.098 billion yuan; and the volume of inter-bank lending registered 3900, with the total value of 853.122 billion yuan.

(2) Intra-bank payment system of banking financial institutions

The business growth of the intra-bank payment system of banking financial institutions slowed down by a large margin. In the third quarter, the volume of transactions processed by the intra-bank payment system of banking financial institutions stood at 740.1237 million, up 15.4 percent over the same period of the last year, a deceleration of 35.0 percentage points, and the total value was 86969.133 billion yuan, up 12.1 percent over the same period of the last year, a deceleration of 13.9 percentage points; the average transaction volume per day registered 8.0448 million, 195000 more than that in the second quarter, or up 2.5 percent, and the total value registered 945.317 billion yuan, 123.839 billion yuan lower than that in the second quarter, or down 11.6 percent.

(3) Inter-bank bankcards payment system

The business volume of inter-bank bankcards payment system continued to grow rapidly, while the growth registered an obvious slowdown. In the third quarter, the bankcard inter-bank payment system processed 944.4211 million transactions[7], up by 42.3 percent over the same period of the last year, a deceleration of 10.6 percentage points and the total value registered 1205.510 billion yuan, increasing 34.3 percent over the same period of the last year, a deceleration of 56.3 percentage points; the volume of transactions per day registered 10.2654 million, with the total value of 13.103 billion yuan, up by 9.9 percent and 8.3 percent over the second quarter respectively.

The volume of inter-bank bankcard-based transactions in developed regions dropped slightly as a percentage of the overall transactions of the payment system. In the third quarter, bankcard-based transactions in the inter-bank payment system concentrated in the relatively developed regions such as Zhejiang, Guangdong, Shanghai, Beijing, Jiangsu and Shandong, where 513.1057 million transactions with an amount of 636.373 billion yuan were processed, accounting for 54.3 percent and 52.8 percent of the overall transactions of the system respectively, down 0.3 and 2.1 percentage points from the second quarter.

(3)Bulk Electronic Payment System (BEPS)

Transactions in the Bulk Electronic Payment System continued to increase rapidly. In the third quarter, the BEPS processed 37,293,800 transactions with an amount of 1251.273 billion yuan, an increase of 144 percent and 49.4 percent over the same period of the last year, representing a year-on-year acceleration of 122.6 and 53.2 percentage points respectively. The system processed 414,400 transactions, or 13.903 billion yuan on average per day[8], up 14.3 percent and 26.7 percent over the second quarter.

(4)Local clearing system

Transactions in the local clearing system registered a slight decline. In the third quarter, the local clearing system processed 109,887,800 transactions, or 17787.908 billion yuan, down 4.5 percent and 5.2 percent from the same period of the last year, or a deceleration of 6.0 and 23.1 percentage points respectively. The system processed 1,690,600 transactions, or 273.66 billion yuan on average per day[9].

2.Bank settlement accounts

In the third quarter, the number of bank settlement accounts continued to grow steadily. As of the end of the third quarter, the number of bank settlement accounts of various kinds nationwide totaled 2339.3317 million, an increase of 220.4256 million, or up 10.4 percent over the same period of the last year. Among the total, entity settlement accounts, which stood at 19.2553 million, accounted for 0.8 percent of the total, a year-on-year increase of 2,104,3000, or 12.3 percent; individual settlement accounts increased by 218.3213 million, or up 10.4 percent year on year to 2320.0764 million, accounting for 99.2 percent of the total.

(1) Entity settlement accounts

Growth of entity settlement accounts slowed down over the same period of the last year. Entity settlement accounts continued to grow in the third quarter, yet with a year-on-year deceleration of 4.8 percentage points. Entity settlement accounts included 11,140,300 basic deposit accounts, 5,761,300 general deposit accounts, 2,135,600 special deposit accounts and 218,100 temporary deposit accounts, which grew 12.6 percent, 13.9 percent, 6.9 percent and 7.1 percent respectively year on year, down 3.6, 5.9, 7.3 and 12.7 percentage points from the same period of the last year.

Entity settlement accounts grew rapidly in regions that enjoy strong economic policy support. As of the end of the third quarter, entity settlement accounts grew 12.3 percent year on year to 19,255,300. In particular, growth in western provinces and autonomous regions, including Ningxia (23.1 percent), Guizhou (17.0 percent), Inner Mongolia (16.2 percent), Shaanxi (16.1 percent) and Gansu (15.7 percent) as well as in central provinces, including Hunan (18.7 percent), Jiangxi (18.1 percent), Anhui (17.9 percent) and Henan (17.6 percent), exceeded the national average. Greater policy support extended by the Central Government to the central and western regions to promote their economic development has boosted local economic vibrancy, which contributed to the rapid increase of entity settlement accounts in these regions.

Growth of entity settlement accounts in various banking financial institutions moderated. As of the end of the third quarter, entity settlement accounts in state-owned commercial banks (10,334,500), other financial institutions (6,273,900)[10], joint-stock commercial banks (2,521,200) and policy banks (125,700) grew 10.5 percent, 15.3 percent, 11.8 percent and 18.4 percent year on year, representing a deceleration of 3.7, 6.5, 6.3 and 6.4 percentage points over the same period of the last year respectively.

Entity settlement accounts with registered capital between 10 million yuan and 100 million yuan witnessed a rapid growth of 17.5 percent, and in particular, saw a year-on-year increases over 25 percent in Jiangxi (27.0 percent), Qinghai (26.2 percent) and Guangdong (26.1 percent). The distribution of such accounts has remained basically unchanged across various banking financial institutions since the first quarter of 2008.

Entity settlement accounts opened by corporations from different industries kept growing, despite a marked slowdown in most industries compared with the same period of the last year.

Top five industries in terms of the year-on-year entity settlement accounts growth which remained unchanged from the last year, were agriculture, forestation, animal husbandry and fishery industry (32.2 percent), household services and other services (26.4 percent), leasing and business services (24.5 percent), extractive industry (18.2 percent) and wholesale and retail industry (16.9 percent). The only two industries that grew faster year on year were the agriculture, forestation, animal husbandry and fishery industry and the financial industry, which saw an acceleration of 5.8 and 0.5 percentage points respectively over the same period of last year.

(2) Individual settlement accounts

Individual settlement accounts continued to increase slightly. At the end of the third quarter, growth of individual settlement accounts was 1.3 percentage points higher than that of the same period of the last year. The number and growth of individual settlement accounts in a region were closely linked to local economic development. At the end of the third quarter, individual settlement accounts in Guangdong (348,271,400), Jiangsu (169,706,100), Zhejiang (168,424,200) and Shandong (145,032,600) totaled 831,434,300, accounting for 35.8 percent of the total individual bank settlement accounts. Particularly, the rapid growth in Jiangsu (22.8 percent), Shandong (20.6 percent) and Zhejiang (15.7 percent) were well above the national average of 10.4 percent, while the growth in Gansu (3.3 percent), Inner Mongolia (2.5 percent) and Ningxia (0.9 percent) were far below the national average.

Beijing, Shanghai and other metropolitan cities took the lead in terms of per capita[11] individual settlement accounts, while Shanghai topped the country in terms of new individual settlement accounts per 10,000 people. As of the end of the third quarter, national average individual settlement accounts per capita stood at 1.79. The figure in Beijing (7.01), Shanghai (6.04), Guangdong (3.69), Tianjin (3.38), Fujian (3.38) and Zhejiang (3.33) far exceeded the national level. New individual settlement accounts per 10,000 people in the third quarter throughout the country were 686.48. Top five provinces and municipalities in terms of new individual settlement accounts per 10,000 people were Shanghai (4449.32), Henan (2967.49), Guizhou (1690.82), Zhejiang (1445.21) and Beijing (1376.60).