Visa's Pride Before a Fall Over the Chinese Wall

by Ken Paterson 0

This interesting blog by Chris Skinner examinesthe ongoing competitive challenges the US based card networks havein gaining access to the Chinese market. In the case of Visa versusChina Unionpay, Skinner clearly sees strategic risks in Visa’scurrent course of action:

For a market that size, it does seem a bit strange forVisa to take the bold action of attempting to block CUP users fromusing their network outside China in June this year, as it resulted in CUPretaliating by blocking Visa from China for ayear.

I say strange as Visa has shot themselves in thefoot.

Rather than trying to pressure China into opening theirborders to trade through international lobbying, whilst trying topartner with them, they have now become an enemy.

Meanwhile, firms like Amex and PayPal have partnered withthem.

Skinner sees the rapidly growing Chinese market asworth the compromise. With 2.1 billion cards issued, CUP and theChinese market are too significant to ignore, or to battlehead-on:

What this says to me is that firms who see China as theland of opportunity must be willing to adapt their business modelsand, potentially, their principles to gain access.

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