Debit card processing is becoming an increasingly important growth strategy for global payment networks as they expand into new markets and diversify beyond traditional credit products. In regions where debit cards dominate consumer spending, building local payment infrastructure enables networks to strengthen merchant acceptance and broaden their role in everyday transactions.
China represents one of the world’s largest debit card markets, making it a strategic opportunity for international payment providers. By investing in local processing capabilities, issuer partnerships, and merchant acceptance, payment networks can better compete in markets where debit payments and digital wallets are the preferred methods of payment.
American Express doesn’t issue debit cards in the U.S. and sold its prepaid card issuing platform to InComm three years ago, but it is gearing up to issue debit cards in China, as PaymentsSource reported. American Express was granted the opportunity to process payment transactions in China approximately 8 months ago and wasted no time in building a platform and expanding its network of merchants in the country.
China has a relatively high level of checking account penetration among its population, around 80%, and debit cards are vastly preferred to credit cards. In 2019, there were approximate 7.4 billion debit cards in circulation. Here’s more from the article:
American Express’ payment processing operations in China are giving it a foundation upon which to expand its debit offering to new countries.
The New York-based card brand spent eight months building a network in China after receiving the nation’s approval to do so, adding 14 million merchants in the process. Amex has built a nascent debit network that has the potential to launch in other regions.
Amex is seeing the payoff in its two-plus years of pursuing a place in the Chinese market through its joint venture with Express Hangzhou Technology Service Ltd., [American Express CEO] Squeri said.
“Developing our core processing network in mainland China has been a priority for us, and since getting the green light to start processing payments in China eight months ago, we have received mobile wallet parity coverage with our partnerships with China’s major mobile wallet providers,” Squeri added.
The 14 million new merchants in China are just the beginning, with more slated to be added in the coming months, according to Squeri. “A key enabler of our coverage growth in China is the progress we are making to modernize our network, particularly in adding the capability to process debit transactions globally.”
Debit processing is “an essential need for customers in China and helps us prepare for additional debit applications elsewhere,” Squeri said, in noting Amex has established 16 key issuing partnerships in China as well.
In a similar pursuit for advancing debit, Amex has looked at the open banking mandates in Europe as a way for card brands to get more exposure, focusing on payment initiation through its Pay with Bank transfer platform.
This was Amex’s answer to the challenge in Europe of not having a major debit card presence, like Visa and Mastercard do. Pay with Bank establishes e-payments through a linked bank account, targeting both merchants and consumers.
Amex changed its financial reporting this quarter to more clearly show how China joins its revenue mix. For the first quarter of 2021, Amex had $44 billion in process volumes and $225 billion in billed business.
The expansion of debit card processing into high-growth markets demonstrates how payment networks are adapting to regional payment preferences and evolving consumer behavior. Strengthening debit capabilities allows providers to participate more fully in domestic payment ecosystems while creating opportunities for future international growth.
As digital payments continue to expand globally, investment in debit infrastructure, merchant acceptance, and local partnerships will remain essential for payment networks seeking to compete in diverse markets. Success will increasingly depend on offering payment solutions that align with local consumer preferences and regulatory requirements.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
