China’s new multifunction contactless social security card will support yuan-denominated cash withdrawals, funds transfers and other consumer-oriented banking applications, government officials told reporters at a press conference Aug. 30.
However, it will not support a credit card function, officials said, not explaining why.
Earlier this month, China’s Ministry of Human Resources and Social Security announced it will work with commercial banks and the People’s Bank of China, the country’s central bank, to add financial functionality to accelerate card adoption and to promote the use of financial services in the country.
The government will cover the cost of the new card, Hu Xiaoyi, minister of human resources and social security, said at the press conference. However, cardholders will pay between 20 yuan (US$3.13 or 2.17 euros) and 25 yuan for replacement cards.
Existing banking regulations will not be changed, Li Dongrong, assistant governor of the People’s Bank of China, said at the press conference. Misuse of the card’s financial functions will be addressed under current laws.
The country’s social security cards currently support only medical billing. Besides the financial functions, the new smartcards also will support pension payments, and unemployment, disability and maternity leave coverage.
“I think it’s a good idea,” says Adil Moussa, payments analyst at Boston-based research firm Aite Group LLC. “I’ve always been a proponent on putting more information on cards.”
Having detailed information, or additional functionality, on a single card improves convenience for end-users, he tells PaymentsSource.
However, The social security smartcard is an interim solution, Moussa says. “Eventually, you will have everything on your phone,” he says.
According to Hu, 145 million social security cards are now in use, and the government will issue 45 million new smartcards by the end of the year. By 2015, he said, China will have issued 800 million social security cards, covering 60% of the country’s population.
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