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The Washington Post:UnionPay looks for ways to win the name game
2015-12-30


UnionPay is not resting on its laurels as it seeks to establish a global payment-card network with tailored services and continuous innovations.

The rapidly growing bankcard association is now the largest payment card network in the world, surpassing its international competitors such as Visa, MasterCard and American Express in terms of market share, according to a report by the market research firm Packaged Facts. 


Global transactions via payment cards reached $17.26 trillion last year, and payments using UnionPay cards totaled $5.9 trillion, accounting for 34 percent of the whole market. Its share of the market grew 40 percent in 2014 from a year earlier. Visa had the second largest share of the market with 27.6 percent, MasterCard had 19 percent, Visa Europe had 11.2 percent and American Express had 5.9 percent, according to the ninth edition of Commercial Payment Cards: U.S. and Global Market Trends. 


Despite these notable accomplishments, Ge Huayong, chairman of China UnionPay, said there is still much for the company to do to successfully compete in the international market. 


“We still haven’t achieved great success like Visa. For example, we handle fewer transactions than Visa and our profit margin is smaller than Visa or MasterCard.” 


Ge said UnionPay will use the experience it has gained in the Chinese market as a foundation for its growth into a global bankcard company.


Growing global presence

Although it is based in the world’s second-largest economy, UnionPay has always positioned itself as a global enterprise, the company said. It has made good inroads in some overseas markets, and is now expanding to more with great ambition. 

UnionPay was established in 2002 as a way to make interbank payment transactions using cards issued by China’s commercial banks. In 2004, the company began to expand beyond the mainland and established its subsidiary UnionPay International. 


In the Hong Kong Special Administrative Region, the starting point for UnionPay’s expansion, more than 16 million UnionPay cards have been issued. Residents in Hong Kong now hold two UnionPay cards on average. 


UnionPay International has established a global network covering more than 150 countries and regions and forged partnerships with more than 400 institutions worldwide. About 5 billion UnionPay cards are now in use worldwide, and the cards are accepted by more than 26 million merchants, putting its brand acceptance on a par with Visa and MasterCard. 


According to a report issued by a Korean financial research institute

150 
countries and regions 
covered by UnionPay’s global network

UnionPay services more than 60 percent of the payment cards in use in South Korea, and nearly 16 million UnionPay cards have been issued in the country, which means one in five residents uses a UnionPay card. 
Thailand’s bankers association announced in August that UnionPay’s chip standards will be used as the industry standard for the banking industry in the country. 

In Australia and Singapore, tourists can take a taxi by swiping UnionPay cards. Passengers can also book European Eurail train tickets on the UnionPay website. 


And with the development of the Belt and Road Initiative, UnionPay has expanded to more than 50 countries and regions involved in the plan. 


For example, in Kazakhstan, nearly 70 percent of A.T.M.s and more than 50 percent of businesspeople accept UnionPay cards. 


In Pakistan, UnionPay cards can be used in about 70 percent of A.T.M.s and nearly 90 percent of point of sale systems. 


All merchants and A.T.M.s in the United Arab Emirates started to accept UnionPay cards at the end of this year. And the acceptance of UnionPay cards in Azerbaijan, Turkey and other countries will also be expanding, according to the company.

Tailored services and innovation

UnionPay continues to learn about different markets and consumer habits, tailoring its services and products to meet their needs, Ge said. 


For example, in developed countries such as the United States and the United Kingdom, businesses and consumers continue to use plastic cards to pay for goods and services. That requires companies like UnionPay process the transactions.


“In the U.S., our focus is on getting more merchant acceptance of our products and services, while in Southeast Asia, we focus more on card issuance,” Ge said. 


Offering market-specific services will be important for the success of UnionPay’s global expansion strategy, he said.


A changer in the international payment market, but at the same time challenged by other competitors in the domestic market, UnionPay has a natural innovation gene, which is a key to its success. 


UnionPay has to embrace innovation as consumers worldwide turn to alternative payment methods instead of cash, with the mobile-payments sector especially experiencing huge growth, he said. 


Figures from China’s central bank show that mobile payment transactions in the country rose 134 percent to 22.6 trillion yuan ($3.5 trillion) last year. 


“We must innovate, especially in terms of mobile and online payments,” Ge said. 


This month, its subsidiary UnionPay Data Services announced it was working with a research team from the Chinese Academy of Sciences to promote the development of a human face identification system for mobile payments. 


The company has also launched its QuickPass service, a contactless smartphone payment service that is safer than a card and not restricted to Wi-Fi networks or international roaming traffic. 


QuickPass, available in countries such as Singapore, South Korea and Australia, offers a safer and faster payment service. 


So far, there are approximately 100,000 point-of-sales terminals in South Korea, Australia, Singapore, and China’s Hong Kong, Macao and Taiwan, that accept QuickPass. 


As the protection of personal financial information is a growing concern for consumers and businesses, Ge said UnionPay remains vigilant at all times. 


“We urge our member banks and processing networks to adhere to rules and regulations that are designed to stop unauthorized access to financial information,” he said. 


Ge said the new cards issued after Jan. 1, 2015 have utilized embedded microprocessor chips. 


“There must be security when processing financial transactions, and it is widely believed that this new chip technology will help better protect the user’s information.” 


Acquisitions and partnerships are also part of UnionPay’s “leapfrog development” strategy, he said. 


“It will definitely be one of our future approaches as the business grows. But the details will be complicated and this will not be easy.” 


Paul Welitzkin and Zhang Yue contributed to this story.
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