China over the next five years will begin adding financial functions to the country’s social security cards, the state-owned People’s Daily newspaper reported Aug. 22. Ninety million of the new cards will be issued by the end of this year, the ministry told the newspaper.
The goal of the project is to accelerate the adoption of the social security cards, as well as promote the use of financial services in the country, the Ministry of Human Resources and Social Security of China said.
The ministry plans to work with commercial banks for the initiative, as well as with the People’s Bank of China, the country’s central bank.
The new social security card will be a contactless smart card that can also be used as a bank debit card, the ministry said.
However, neither the ministry nor the People’s Bank have provided any detailed information about about how the participating financial institutions will be chosen, nor whether cardholders will have to pay any additional fees for these new features, Wenli Yuan, a senior analyst for United States-based research firm Celent LLC, tells PaymentsSource.
The ministry’s original announcement “includes security requirements in the areas of technology, operation and management,” she says.
For example, both the social security card function and the financial functions will be handled by a single chip, the ministry said. However, the chip’s internal data storage will be divided, so that the social security information is stored separately from the financial information.
As of the end of 2010, only 100 million people out of China’s population of 1.37 billion had social security cards, the ministry told the People’s Daily newspaper. By 2015, the ministry expects the number of social security cards in circulation to reach 800 million and cover 60% of the population.
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