The card scheme China UnionPay issues roughly 7 billion cards in 48 countries, and is making further progress in Europe. They will soon be landing in the UK where they will directly challenge the leading schemes Visa and Mastercard on one of their main markets.
As of next October, the Chinese scheme will partner with a British company (whose name hasn’t been disclosed), to rollout their payment services in the UK. Other launches should be announced in other European countries starting in December.
Meanwhile, CUP plans to issue prepaid virtual cards for their corporate customers in the UK so they can make them available to their employees when travelling in Asia. These cards can be stored to a dedicated mobile wallet. The Chinese group also intends to boost their payment solution and target local European customers.
Rather than applying for a banking licence to reach out for European markets, UnionPay relies on third-party banks for issuing processes. Their transactions will also be processed by third parties. CUP may then avoid the prudential constraints imposed on Payment Institutions.
Comments – Challenging Visa and Mastercard in Europe?
The Chinese group has been growing strong worldwide over the past few years, especially in Asia with roughly 7 billion cards issued. These cards are accepted by 41 million merchants and 2 million ATMs in 170 countries. CUP leads the payment card market in China but has to face increasing competition. They opted for partnerships to remedy this situation. The card scheme joined hands with Alipay to further work on barcode-based payments. In April, they also announced a strategic agreement with WeChat Pay (Tencent) to focus on QR code payments.
Their expansion plan used to be centred on Asian markets, but they now intend to improve their presence and increase their customer bases in Europe. Likewise, UnionPay partnered with Cartes Bancaires as they will try to attract French merchants starting next year.