Visa has been the world’s most popular debit card provider for many years. However, according to the latest research, China UnionPay overtook the U.S. Visa debit card for the first time last year.
Out of the total 624.86 billion worldwide card transactions from Visa, UnionPay, Mastercard, American Express, and other major card providers, UnionPay accounted for 40.03% of the world’s debit card market in 2022 while Visa fell short at 38.78%.
The count of card payments continues to grow year over year. When comparing 2021 to 2022, there was a 7.5% increase in card payments. UnionPay showed growth with a 1.39 percentage point increase and Visa suffered a dip of 0.82 percentage points.
In terms of credit and debit share, Visa came in at No. 1 with 38.7% share and UnionPay fell behind at 34%. Credit is popular in the U.S.—but not as popular on the global scale. It makes sense that China UnionPay would fall behind when credit is considered.
In mid-2022, China unveiled tighter rules to regulate their $1.3 trillion credit card industry. With the new rules, lenders were urged to adopt a “prudent” growth strategy and to stop using the number of cards issued as a performance metric. Banks were also required to cap the number of dormant cards at 20% of total cards.
In the U.S., there is no regulatory cap on the number of dormant cards in the market. However, issuers have a limit to the amount of credit they can extend, and since they would rather extend credit to active cardholders who would utilize the credit, there is an innate incentive to close inactive accounts. Credit card accounts may be closed anywhere from six months to greater than two years of inactivity.
There is a global trend of increasing card payments as the preferred way to pay. Debit is the most favored card payment globally and will continue to grow at a faster pace than credit. Visa will continue to hold its market share when credit is accounted for but may struggle to reach the No. 1 spot again for debit alone as other markets ramp up their debit utilization. UnionPay surpassing Visa’s debit share is a major feat. Visa may change their global strategy to attempt to regain debit market share.
Overview by Sophia Gonzalez, Research Analyst, Debit Advisory Service at Javelin Strategy & Research.
