Shoppers walk past a store displaying a China UnionPay Co. sticker in Shanghai
China’s government indicated that it’s set to end China UnionPay’s monopoly on bank-card clearing in the nation, opening the way for domestic and foreign competitors.
Foreign and Chinese companies can apply to set up such services, the central government’s microblog reported yesterday, citing a State Council meeting headed by Premier Li Keqiang. The statement didn’t give any timeframe.
Yesterday’s announcement comes after the World Trade Organization told China in 2012 to stop discriminating against foreign payment companies, a group that includes Visa, MasterCard and American Express. UnionPay is the sole clearing service provider for yuan-denominated bank-card payments.
Established in 2002 in Shanghai by the State Council and the central bank, China UnionPay has more than 3.8 billion bank cards in circulation. In 2013, bank-card transaction value amounted to 32.2 trillion yuan (USD5.3 trillion) in China, an increase of 48 percent form a year earlier, according to UnionPay.
A case brought by the U.S. government to the World Trade Organization and ruled on in July 2012 challenged China’s requirement that foreign card issuers – including Citigroup, which in August 2012 became the first Western bank in China to issue solely branded credit cards – must use UnionPay’s network for yuan-denominated transactions.
UnionPay supports and will follow the government’s decision, the company said in a statement yesterday, adding that it will compete “fairly” and under the same rules as new entrants. The company will embrace competition by improving its products and services, according to the e-mailed statement.
UnionPay surpassed MasterCard in 2012 to become the world’s second-biggest payments network by customer spending. Bloomberg
No Comments