Accepting Chinese debit cards pays dividends
Updated: 2012-09-07 07:45
By Yu Wei (China Daily)
Saks Inc in New York City began accepting China UnionPay debit cards in September. Yu Wei / For China Daily
Upmarket US retailers cash in on influx of tourists from the far east
Hoping to attract the business of Chinese travelers, luxury retail chains Saks and Neiman Marcus will soon start accepting debit cards issued by China UnionPay Co at select US stores.
Saks Inc is installing point-of-sale keypads that accept UnionPay cards' personal identification numbers at its Saks Fifth Avenue flagship store in New York. The company plans to add other stores over the next few months, spokeswoman Julia Bentley said.
China UnionPay is China's only provider of domestic bank-services cards, credit and debit. Both Saks and Neiman Marcus already accept China UnionPay credit cards.
Efforts to capture the lucrative market of Chinese tourists are not new. The French jewelers Van Cleef & Arpels and Cartier, the Swiss watch makers Piaget and Omega and the duty-free chain DFS Galleria, owned by LVMH Moet Hennessy Louis Vuitton SA, have been taking China UnionPay cards for some time, as have mid-range retailers such as Macy's, Apple and Best Buy.
"Macy's has accepted (China UnionPay's debit) card since 2004," says Jim Sluzew-ski, a spokesman for the department-store operator based in Cincinnati, Ohio.
"The card is accepted in all Macy's stores and is popular among our customers who visit from China."
China UnionPay says its debit card is the most popular mode of payment among China's richest consumers because purchases are linked to a bank account rather than a limited credit line.
Other benefits: No fees are applied to purchases and the buyer has the option of getting cash back at the store checkout.
"Our goal is to make it easier for our Chinese customers to pay however they wish to pay," Bentley says.
Like Saks, Neiman Marcus of Dallas will begin accepting China UnionPay debit cards at some stores beginning this month. These include the Neiman Marcus store in Honolulu and the Bergdorf Goodman department store in New York.
The company plans to follow suit at Neiman Marcus stores in Los Angeles, Las Vegas, San Francisco and Boston.
"We like to accommodate as many Chinese customers as we can, and most of them prefer debit cards to credit cards," says Ginger Reeder, a spokeswoman for the privately held Neiman Marcus Group.
"We have seen more Chinese customers in our stores over the years, and the most popular items among Chinese travelers are handbags and other accessories."
To enhance its service to shoppers from China, the company has begun hiring Mandarin-speaking sales assistants.
"Every store has at least two or three and we'll continue to hire more," Reeder says.
Not so long ago the upmarket retailer only accepted its store credit card, cash and American Express.
"The funny thing is, two years ago Neiman Marcus didn't accept Visa, MasterCard or checks at its stores," says Milton Pedraza, CEO of the market-research firm Luxury Institute LLC.
"Now they allow all kinds of payment because they realized they were losing sales by their card policy. When I was in Miami I had to go to a cash machine before buying something in Neiman Marcus because I didn't have a Neiman Marcus credit card, which was very inconvenient."
Pedraza considers Neiman Marcus' revised card policy a "must decision" that proves that retailers need to adapt to customers' changing preferences. "Smart companies will do it because they're customer-centric," he says.
US retailers still have work to do in better serving Chinese shoppers, consumers, Pedraza says.
"We are not friendly enough to Chinese customers compared to Europeans (visiting the US). That's a lot of opportunities because today the Chinese consumer is a very important global consumer and will be more important in the future."
A record 1.1 million Chinese visited the US last year, up 36 percent from the previous year, the US Commerce Department's International Trade Administration says.
The country's economic growth has boosted the buying power of Chinese who travel abroad, and some savvy US businesses have taken steps to draw in these shoppers.
An example is the prominent placement of UnionPay's logo at the checkout counters of some upmarket retailers, along with the installation of the PIN-enabled keypads.
Wu Miaoqing, visiting New York from Hangzhou, a coastal city in eastern China's Zhejiang province, applauded the decision by Saks and Neiman Marcus to start taking China UnionPay debit cards.
"Being able to use the card abroad not only makes my purchase convenient, it also makes me feel good. It shows the businesses care about us."
(China Daily 09/07/2012 page16)