Yucheng Technologies Ltd. and China Merchants Bank

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BEIJING,[link widoczny dla zalogowanych], April 11 /Xinhua-PRNewswire-FirstCall/ -- Yucheng Technologies Ltd. (Nasdaq: YTEC), a leading IT solution and services provider focused on the Chinese banking industry, today announced a partnership with China Merchants Bank, the leading credit card issuer in China, to launch its Point of Sale (POS) merchant-acquiring outsourced services for banks in China.
Yucheng's POS merchant-acquiring outsourced services provide Chinese banks with a total outsourced solution for merchants in China, including POS machines and maintenance, merchant acquisition, authorization and capture of transactions, clearing and settlement of transactions, information reporting services related to transactions, merchant billing services and merchant training. Revenues from merchant acquiring services derive primarily from a percentage share of the transaction value for processing electronic payments, including credit,[link widoczny dla zalogowanych], debit, and prepaid cards. The Yucheng merchant-acquiring team already has a staff of over 70, 90% of whom are in merchant acquisition, and plans to expand that number
dramatically in the next few years. To date, the company has established a strong presence in Beijing and Nanjing and has signed on more than 550 merchants, which already establishes it as a leader in the nascent outsourced merchant-acquiring segment in China. The company will focus on merchants of all sizes across a wide array of retail market segments that have relatively high transaction volumes, including restaurants, shopping malls, and bars.
Yucheng's CEO, Mr. Weidong Hong stated: "We are excited about launching POS merchant-acquiring outsourced services,[link widoczny dla zalogowanych], as it signals Yucheng's official entry into the payment processing business which will likely grow at a an exponential rate in China as consumers shift payment from cash to card for transaction purchases, just like what the US and other developed countries have done in the last 20-30 years. Our first partner, China Merchants Bank, is well recognized for its market leadership innovations with respect to card products and services, and is the leading dual-currency credit card issuer in China with an over 34% market share. We believe that other local banks will follow China Merchants Bank's lead to explore outsourcing the merchant acquiring services to broaden their merchant networks. We are already in exploratory discussions with another leading local bank for similar partnership."
Jiabin Jing, the General Manager of the merchant-acquiring business unit, stated: "We see a huge demand from bankcard holders to make payments using bank cards instead of cash. Today, POS machines are not widely installed and used by merchants in China,[link widoczny dla zalogowanych], especially in cities and areas other than Beijing, Shanghai, Guangzhou, and Shenzhen. There are currently only 810,000 POS machines installed at merchant sites across China. As of the end of 2005, POS transaction volume was only 5% of the total retail volume in China, as compared to around 40% in the US and other developed countries. Revenues deriving from our installed POS network are recurring since we get a percentage of the processed payment transactions, and our profits per POS unit will likely grow as consumers pay more frequently using cards instead of cash for purchases. Yucheng provides a compelling
new proposition with superior products and service offerings for banks and their merchants across China. By the end of this year, we expect to be operational in 8 cities with a total of 7,000 high-quality merchants signed on to our platform."
About Yucheng Technologies Ltd.
Yucheng Technologies Ltd. is a leading IT solution and services provider to the Chinese banking industry. Headquartered in Beijing, China, Yucheng has more than 800 employees and has established an extensive footprint to serve its banking clients nationwide with five subsidiaries and representative offices located in Shanghai, Guangzhou, Xi'an, Xiamen, and Chengdu. Yucheng provides a comprehensive suite of IT solutions and services to Chinese banks ranging from 1) system integration and IT consulting, 2) solutions and software platform, and 3) outsourced operations. Yucheng counts 12 out of the 15 top local commercial banks in China as its customers, and is especially strong in banking channel management IT solutions and services, such as web banking and call centers.
It has a 70% market share in 2005 in China's web banking application market, calculated based on users according to a third party research report. Most recently,[link widoczny dla zalogowanych], Yucheng made a strategic investment to provide risk management services to meet clients' growing demand in this area, driven by profit conscientiousness and Basil Accord II compliance. Yucheng is ranked one of the top five IT solution providers, along with IBM and Digital China by IDC's "China Banking Industry IT Solution 2006-2010 Forecast and Analysis" report released in September, 2006. The Yucheng management team and board consist of industry veterans with extensive experience in serving the Chinese banking industry.