With electronic payment systems rapidly growing in Asian markets, Visa International has launched cobranding partnerships with two department stores in China.
These cards, issued by Industrial and Commercial Bank of China, deliver discounts and other promotional benefits when used at the Sincere Department Store in Shanghai and the Guangzhou Department Store in Guangzhou.
ICBC is the largest bank in China, with about 35,000 branches and more than 500 million deposit accounts, according to Visa. The bank has issued more than three million credit cards.
The new cobranded products will be known as the Sincere Peony Visa and Guangzhou Department Store Peony Visa. The Peony Card was first introduced in China by ICBC in 1989.
Visa said it expects that more than 100,000 cards will be issued through these cobranding relationships over the next 12 months.
Shanghai Sincere, founded in 1900, was the first department store founded by the Chinese in Hong Kong. Visa said it has expanded to incorporate a wide variety of businesses, including property and insurance. Guangzhou Department Store opened in 1991.
"Cobranding provides an excellent marketing strategy to build customer loyalty while providing benefits for the cardholder, the issuing financial institution, and the cobranding partner," said Richard Bialek, senior vice president of consumer credit products at Visa.
Visa, which has initiated 90 cobranded and affinity programs in China, Taiwan, Hong Kong, and Macau, believes cobranding is on its way to becoming a major trend in Asia over the next five years. It projects that cobranded cards in China will reach two million in the next two years.
Long perceived as unwelcome in China, electronic currency has skyrocketed in recent years. Hoping to capitalize on the popularity, China's National Tourism Administration in March signed a multiyear marketing agreement with American Express Co., hoping to boost the number of North Americans traveling to China.
"In some ways, China is right at the leading edge" of credit card advancements, said Mr. Bialek.
Referring to cobranded store cards in particular, he said, "It's exciting to see China adopting a tool that more mature markets in the United States and Europe have been using."
In April, MasterCard announced that it had joined with ICBC and Shanghai Airlines to launch a cobranded credit card. Standard cardholders receive a 3% discount on all tickets bought at 15 Shanghai Airlines offices, while gold cards provide a 5% discount.
Brian Thom, senior vice president of marketing for MasterCard's Asia- Pacific region, predicted the cobranded card would attract 10,000 customers initially.
While neither the Visa nor the MasterCard cobranding deals are tied directly to it, the Golden Card payment system projects in China are having an influence.
"It fits in, in that the Golden Card projects are helping to establish an infrastructure to advance payment systems in China," said Mr. Bialek. "I see this cobranding program as a tool to do the same."
Moving to create a national consumer payment system, the Golden Card coordinators have pursued the U.S. credit associations for technological and training assistance. The first project, in Guangzhou, was apparently won by MasterCard after fierce bidding.
Both Visa and MasterCard have made moves to gain the upper hand in pursuit of Golden Card contracts. In May, Visa appointed Liu ting Huan, executive vice president of ICBC, to its Asia-Pacific board - its first Chinese representative.
MasterCard has had a director from China for several years. Its current representative is Yang Huiqiu, executive vice president of the Bank of China.
The status of the second Golden Card project, in the Beijing region, has yet to be resolved. MasterCard has said that the Guangzhou project will be implemented by the end of July.
