China UnionPay, which in 2015 became the world’s biggest payment card issuer, has announced plans to launch UnionPay branded cards in the UK, a first step in a larger European expansion aimed squarely at challenging its Visa and Mastercard in their key markets.
China UnionPay eyes major European expansion with UK launch
The move comes as UnionPay faces intense competition in its home market from digital payments groups Alipay and WeChat Pay. It is also likely to add to the frustration of its US rivals, which have spent years trying to enter the Chinese market.
The Chinese state-controlled group will team up with a UK company as early as next month to start issuing virtual pre-paid cards for British corporate clients to give to their staff for use via a mobile wallet when travelling in Asia.
This will be followed by more deals to issue UnionPay branded credit cards elsewhere in Europe as early as December. “In Europe we want to target local customers in the domestic market, not only people travelling to Asia” said Zhihong Wei, head of UnionPay in Europe.
UnionPay has a has issued 6 billion cards — more than Visa and Mastercard combined. The Chinese group has been expanding internationally in recent years, mostly in Asia, and its cards are accepted by more than 41 million merchants and 2 million ATMs in 170 countries.
It first moved into Europe a decade ago to provide access for Chinese tourists and its cards are now accepted by 60% of merchants and ATMs in the region.
UnionPay operates with a business model similar to Visa and Mastercard, earning a commission on each card swipe. But the rise of mobile payments in China — dominated by Ant Financial’s Alipay and Tencent’s WeChat Pay — has dislodged UnionPay from its dominant position in electronic payments.
Beyond the loss of fee income, the group is also losing access to valuable transaction data from consumers who have switched from plastic to mobile phones. However, Mr Wei said UnionPay was regaining ground on its digital rivals with its QuickPass system, which uses NFC chips of the type used at subway turnstiles around the world and contactless card payments in the US and UK.
The post China UnionPay eyes major European expansion with UK launch appeared first on Payments Cards & Mobile.
