China Merchants Bank, the mainland's sixth-largest commercial bank, has obtained Beijing's approval to enter the undeveloped but sizeable foreign-currency credit-card market.
The Shenzhen-based bank said People's Bank of China had granted it permission to issue international credit cards in foreign currency to local residents.
The authorisation meant that China Merchants would join the fray to compete with mainland rivals to tap Chinese citizens travelling abroad, an estimated 6.9 million last year.
China Merchants is the fourth domestic bank approved by Beijing to issue the international cards, which are settled in foreign currency, mainly US dollars.
In response to the growing need by customers for a convenient tool to carry money when travelling abroad, the mainland has approved the Bank of China, Industrial and Commercial Bank of China and Guangdong Development Bank to issue international cards for its citizens to use overseas.
Analysts said the high-growth potential market would be a new battlefield between domestic and foreign players as China had pledged to open the banking market wider after its World Trade Organisation entry.
In 2007 all foreign banks will be free to enter the yuan market and offer all sorts of loan products to individuals. Credit cards will be one of them.