China’s Credit Card Market Still Shut
UnionPay is charging overseas, with the latest sighting of its tri-colored logo at London’s Ritz Hotel. Not even a decade since its launch and it already has well over two billion cards in circulation.
But unless you live in China, you may have never heard of it.
“Last year, its transaction volume overseas increased about 47%, so it’s making a lot of headway internationally. Just to use an example of what’s happening. If you look at Harrods in the U.K., they installed UnionPay paypoints in the first quarter of this year and they’ve already seen sales to Chinese consumers go up 40%.”
In mainland China, the card is enjoying a monopoly.
Thanks to the country’s billion-plus consumers and its growing love affair with plastic, China UnionPay says it now operates the world’s third most-used payment card after Visa & Mastercard.
China joined the WTO with promises to give market access to the likes of Visa and Mastercard by 2006.
Today, the local currency card industry is still firmly shut. Mastercard’s Greater China Division President, Ling Hai, is optimistic.
“I think if we talk about the domestic market, I’m very hopeful China will eventually open up. I can’t comment on the timing, but I think that’s definitely the direction it is going.”
U.S. trade representative, Ron Kirk, has taken the case to the WTO. And if Washington doesn’t get its way, some hard-won trade concessions are likely to end up on the chopping block.
In 2001, card payments in China accounted for only 2.7% of retail sales. Today, they have jumped to 35%, reaching $1.6 trillion in sales.
Meanwhile, UnionPay is gallivanting overseas, tracking the nation’s increasingly footloose population.
“They’ve stated very clearly that they want to be a global brand and they’ve got a lot of backing for that because they’ve got more and more Chinese consumers that are traveling abroad, spending money abroad but who don’t necessarily have access to credit cards with international currencies.”
So while the gates are shut to foreign players at home, it seems there is also no stopping China UnionPay in its overseas ambitions.
From Singapore to Sydney and New York – look for the logo. It may already be on a card in your wallet.
Bottom line: China’s UnionPay ventures overseas, even as the gates stay shut to foreign players like Visa and Mastercard at home. Part one of a two-part series on China’s card payment systems.