Although many in the UK will not have heard, there is a new giant in credit card payment processing. Third, in terms of transaction value processed (behind MasterCard and Visa), China UnionPay was only established in 2002, but it is already a force to be reckoned with, and a brand we are sure to hear much more about in the UK in the coming years.
What is China UnionPay?
As the name suggests, China UnionPay (or UnionPay) was established in the Peoples Republic of China, with the blessing of the Chinese government, to provide a payment processor for four major Chinese banks.
With a Monopoly on clearing for domestic Chinese payments, UnionPay grew rapidly as the wider Chinese economy flourished.
Although a World Trade Organisation ruling in 2012 confirmed that the processor had an unfair competitive advantage, paving the way for liberalisation of Chinese payment processing in 2015, UnionPay had already leveraged its position to become the world's largest supplier of payment cards (with over 5 billion cards issued bearing its logo).
Where can you use a China UnionPay card?
As the Chinese appetite for international tourism ballooned, so the number of countries where UnionPay was accepted exploded.
This growth was partly driven by the fact that Chinese tourists often prefer to use a familiar brand abroad, but also because a dispute between Visa and UnionPay saw dual processor cards (which featured the logos of both payment processor) disappear from Chinese customers. Visa and MasterCard (and even American Express) products continued to be offered by Chinese banks for customers travelling abroad, but to ensure Chinese customers could pay easily, many foreign retailers (especially luxury goods retailers) adopted UnionPay as an additional payment method. As a result, UnionPay can now be used in over 150 countries.
Who accepts China UnionPay cards in the UK?
UnionPay cards are accepted widely in the UK.
Since 2009, UnionPay cardholders have been able to withdraw cash from the LINK network's 70,000 ATMs, although annual withdrawals per card have been capped at 100,000 yuan (CNY) since 2015 (approximately £11,000) to help prevent capital flight from China.
Many businesses associated with tourism also now accept UnionPay, including:
In fact, a VisitBritain guide (published in Cantonese and English), includes a directory of the numerous hotels and attractions where cardholders can use UnionPay in the UK.
Where next for UnionPay?
Despite its size, UnionPay is still very reliant on the Chinese domestic market. Outside of China, it is rarely the processor of choice, but it is working on plans to challenge outside of China (as MasterCard and Visa take the fight to it domestically). Deals have already been struck in some countries (like Myanmar) for UnionPay to process transactions, and more are likely follow. Aside from that, UnionPay is working on using blockchain technology to enable users of different banks to exchange reward points, as a way to fast track their challenge in the west. Clearly, we'll be hearing a lot more about UnionPay in the coming years.
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