China UnionPay Clearing Monopoly to End

by Tristan Hugo-Webb 0

China’s State Council (a leading authority body in thecountry) has announced that it will soon end the country’s domestic network’smonopoly on clearing, paving the way for Visa and MasterCard to operate openlyin the market. While the announcement was report by Reuters, the State Councilfailed to give details on the opening of the market meaning there is still notimeline for this transition.

Today, all foreign card networks like Visa and MasterCardhave to use China UnionPay’s network rails when processing yaun payments andcompensate China UnionPay accordingly. However a World Trade Organisation (WTO)ruling a few years ago forced Chinese authorities to promise to open themarket, meaning that Visa and MasterCard would eventually compete on an equalfooting.

In a statement given to Bloomberg, China UnionPay supportsthe government’s decision and will compete “fairly” by improving itsproducts and services. While the announcement is key to the payment industrycapitalizing on the vast and seemingly unlimited potential, the lack of detailsprovided by the State Council should be highlighted given that by not providingdetails China UnionPay will continue and could continue to experience itsmonopoly into the foreseeable future.

For more information on the Chinese market, see MercatorAdvisory Group’s Research Note, ChineseElectronic Payment Market Update (http://www.mercatoradvisorygroup.com/Notes/Chinese_Electronic_Payment_Market_Update/) released in March 2014.


Overview by Tristan Hugo-Webb, Associate Director, International Advisory Service for Mercator Advisory Group

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