With Wirecard, UnionPay takes aim at Visa, Mastercard


China’s UnionPay, the world’s largest card issuer with 57.6% of the world’s payment cards in circulation, has global ambitions. Its latest move is a memorandum of understanding with digital payments giant Wirecard, a partnership which will help it expand to new markets and craft new payment solutions for foreign visitors to China.

Wirecard, which has an acquiring license, will help UnionPay expand its global footprint, said Georg von Waldenfels, executive vice president of group business development at Wirecard. “We also will start to issue physical, as well as digital, cards outside of China,” he added. UnionPay could not be reached for comment by press time.

Geographic expansion plans will focus on Europe as a first step, along with the Asia-Pacific region, after which Wirecard will work with UnionPay on a plan to expand to other markets, von Waldenfels noted. UnionPay also plans to take advantage of the 2022 Winter Olympics in Beijing as an opportunity to launch a new consumer payments solution for foreigners visiting China.

UnionPay has been aggressively expanding to international markets through partnerships with tech companies. In June, UnionPay partnered with Tribe Payments, a U.K-based startup, to allow banks and startups to begin offering UnionPay cards in Europe. As a result, European companies that do business in China would be able to use UnionPay in China, and Chinese businesses operating in Europe could take advantage of consistent payment methods in Europe and China, said Tribe founder Suresh Vaghjiani in a recent interview.

See also: Wirecard’s cashier-free checkout to help retailers stand up to Amazon

UnionPay’s enhanced efforts to expand internationally may be in anticipation of further competition from Visa and Mastercard, which seek access to the Chinese market. The inability of foreign card companies to reach the Chinese market has been a sticking point in global trade talks. In 2010, the U.S. filed a WTO case against China over access to its card market. While the WTO ruled in the U.S.’ favor, implementation has been slow, with American Express acquiring a preliminary license to operate in China in November 2018.

“Visa and MasterCard are lining up to seek market access to China, [and] UnionPay realizes it needs to compete globally with the leading credit card companies in the world, both inside and outside of China,” said Xiaomeng Lu, China practice lead at public policy consultancy Access Partnership.

Within China, a key use case for which UnionPay and Wirecard are looking to find a solution is a means for foreign visitors to make payments in China, where Visa and Mastercard aren’t widely accepted. Wirecard didn’t offer details on the types of solutions it’s pursuing with UnionPay, but von Waldenfels hinted that it would incorporate both physical and digital methods.

While payment solutions for visitors to China through UnionPay solves a pain point, working around traditional systems that rely on Chinese bank accounts won’t be easy, according to Meng Liu, a Beijing-based payments analyst at Forrester Research. “For UnionPay, you need a [Chinese] bank account,” he said. “With Wirecard, they’re likely to find a more innovative, non-traditional solution.” Anti-money laundering mechanisms for the new solution also will require careful consideration, he noted.