Shanghai Street View: Membership Mania

This week’s Street View zeroes in on Shanghai’s growing love for plastic, which has fueled an explosion of membership, gift, credit and debit cards issued by just about anyone in the retail sector. This strange love of plastic has led government officials in Pudong to take the much-needed step of trying to regulate an unruly group of merchants, some of whom sell cards worth thousands of yuan to consumers and then suddenly close up shop and disappear with the money.

As a westerner who grew up with credit and ATM cards, I’m certainly quite accustomed to buying goods and getting money from the bank using plastic cards rather than cash. But Shanghai merchants have taken this concept to a whole new level, loading up people’s wallets with piles of cards that perform a wide array of very limited functions.

Before I continue with my gripes about Shanghai’s plastic addiction, let’s take a look at the new Pudong law that marks a good first step toward regulating this popular practice. In this instance, 3 local agencies have come together to roll out a new system to register and regulate Pudong-based merchants that issue cards. That covers quite a range of companies, since everyone from beauty salons to restaurants, hotels and massage parlors all seem to have their own membership cards these days.

The rules lay out guidelines for things like expiry dates and refund policies, in a bid to protect consumers. The report I read says 38 companies have already registered under the new rules, which apply to the more than 500 retailers who do business in Pudong. I suspect there are far more than 500 merchants issuing such cards, and hopefully this new campaign will result in more uniformity in their practices.

From my perspective, an even better policy would be to forbid many of these shops from issuing cards completely, especially the smallest merchants with only 1 or 2 stores. These companies pose the biggest risk to consumers, since it’s easy for them to quickly close up shop and leave their customers with membership cards containing thousands of yuan in worthless credit.

I personally fell victim to one such scam when the place where I get my hair cut convinced me to spend 1,000 yuan for one of their cards, then suddenly closed a few months later when I still had 500 yuan left in credit. Many of my friends have similar stories.

This recent card explosion contrasts sharply with the China of only 20 years ago, when the nation was a cash-only society. I remember when Bank of China issued its first Great Wall Visa card back in the 1980s, even though it was extremely difficult to get them and such cards came with huge limitations.

Fast forward to 2013, and it’s almost ridiculous how many plastic cards the average person in Shanghai now carries. Most of my friends have accounts with at least 4 or 5 different banks, meaning they have to carry cards for each of those in their wallets. Then there are all the other membership cards, which are needed for everything from grocery shopping at Carrefour to sipping coffee at Starbucks.

I personally have quite a few cards in my wallet, including one for my gym, 4 ATM cards for my various banks, 2 credit cards and membership cards for the places I visit for massages and haircuts. The university where I teach also has its own stored value card, as do several of the restaurants I frequently visit. Many merchants practically force people to buy their cards, which automatically offer massive discounts to the official prices.

While I find carrying around so much plastic quite cumbersome and a hassle, many of my Chinese friends actually seem to enjoy having so many cards and love to use them. One of my biggest pet peeves is the growing number of people who insist on paying for everything with their bank cards, even when it’s something that costs as little as 20 yuan or less. I have no objections to using plastic for bigger purchases, but it seems excessive for something that small.

I have to admit I don’t have any major theories on why Shanghai people love their plastic so much. Perhaps having so many cards makes them feel high-tech and fashionable. Then there’s also the prestige factor of impressing friends with memberships at so many shops and restaurants. And of course everyone always loves a bargain, especially when not having a card means you have to pay twice the price for something.

At the end of the day, it does seem like people here in Shanghai are hooked on their plastic and that this explosion of cards is probably here for the long-term. But at least we may get some relief from new oversight like what we’re seeing in Pudong, which should help to check this membership mania from getting out of control.