The irony of it all: Mastercard and Visa struggle to issue in China because of regulatory constraints while UnionPay moves into Europe. Go figure.
According to the Financial Times, UnionPay is launching a Mastercard/Visa-like model in Europe as MC and V still await issuing approval in China.
- China UnionPay, the world’s biggest card issuer, is to start offering debit and credit cards in Europe for the first time as the Chinese state-controlled giant continues its global expansion to challenge Visa and Mastercard.
- UnionPay, which has issued more than six billion cards in China, has partnered with Tribe Payments, a new UK based back-office technology startup to allow banks and fintechs to start offering individuals and companies its branded cards.
Tribe Payments offers a variety of card services; its platform originally supported Mastercard and Visa, and now, the first in Europe for UnionPay.
- This agreement shows UnionPay’s intent to compete with the major card schemes in Europe, said Suresh Vaghjiani, the founder of Tribe. “This is the first time European institutions will be able to put UnionPay cards in the hands of people on the street.”
- The Chinese group has been expanding internationally in recent years, mainly in Asia, and says its cards are accepted by more than 41 million merchants and 2 million ATMs in 170 countries, 40 of which are in Europe.
Acceptance is one thing. That is accomplished either directly or through bilateral arrangements such as Discover.
- UnionPay’s new move comes amid intensifying competition in its home market from digital payment groups such as Ant Financial’s Alipay and Tencent’s WeChat Pay. The two have dislodged UnionPay from its dominant position online, robbing it of fee income and valuable transaction data from consumers who have switched from traditional plastic to mobile phones.
High Street banks prepare for a new product offering coming to a bank near you. U.S. issuance may soon follow, but whatever happened to letting U.S. banks issue in China?
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group