China UnionPay Prepares for Widespread Contactless Payments

by Terry X Xie 0

China has yet to experience a large-scalerollout of contactless cards or Near Field Communincation-basedmobile payments, but China UnionPay is quietly and quicklydeploying the necessary point-of-sale terminals to accept thesepayment forms throughout the country.

As of Aug. 30, over 900,000 terminals can accept QuickPass, whichis UnionPay’s contactless feature. That figure represents 15percent of the total deployed terminal base in China. The figurealso is a 45-percent increase from 620,000 just six months ago.Mercator Advisory Group forecasts that number could reach about 1.2million by the end of 2012 as China UnionPay accelerate thecontactless-deployment process. That would translate into some800,000 merchants accepting contactless payments.

The ongoing deployment of contactless terminals in China means thecountry would be more than prepared for the anticipated massrollout of NFC mobile payments once the banking and mobileindustries manage to find a way to work with each other.

As China UnionPay ramps up contactless-terminal deployment, thecountry’s central bank has asked the banking industry to migrate tochip cards. All cards issued after Jan. 1st, 2015 should be chipcards, according to the central bank’s time line.

As of July, the majority of POS terminals in China had beenupgraded to be PBOC 2.0-compliant. PBOC 2.0 is China’s standard forchip cards. The change has been slower on the issuing side,however, as banks are working hard to issue more chip cards asrequired. Over 45 million chip cards have been issued in China asof July.

Mercator Advisory Group provides the industry’s leading coverage onthe payments market in China, one of the world’s largest andfastest growing. This year’s annual China market report is expectedto be published in January 2013.