Industry executives and lawyers say the companies are wary that overt support will upset UnionPay, which is their partner and sometime regulator in China. Companies fear that public criticism of the Chinese government or the companies it owns could make them vulnerable to rivals that cooperate more with the government and jeopardize their futures in a market that could have 1.1 billion credit cards by 2025, according to some industry projections.
To win U.S. backing for its WTO accession in 2001, China agreed to open its electronic payments market completely to foreign companies by the end of 2006. Instead, the Trade Representative says, Beijing has bolstered state control of the industry. UnionPay, which the government formed in 2002, is closely tied to the People’s Bank of China from which it drew some of its top executives.
Visa reportedly warned its members outside China against routing co-branded Visa/CUP cards (which use Visa’s BIN #s) outside of Visa’s networks. Since then, Visa has not been able to launch any new such card programs in China as CUP holds off approving any such new programs, according to news reports. Neither Visa nor CUP have publically commented on this.
At the same time, MasterCard has avoided publically challenging CUP’s monopoly in the domestic market and has been trying to find common ground with CUP. Last year, Mastercard signed a memorandum of understanding with UnionPay to “explore business cooperation.” The focus is expected to be on e-commerce payments.
Find more details and discussions on related topics and other major issues and developments in China’s payment market in Mercator’s annual China report series, the latest being Payment Card Market in China 2010.
The article can be found here: http://infoseekchina.wordpress.com/2011/03/02/u-s-card-companies-shrug-at-chinas-monopoly/
