UnionPay launches European expansion; foreign card issuers still find access to the Chinese market difficult

China’s state-controlled payment card company UnionPay is launching its initial foray into European markets by providing electronic mobile payment cards to corporate customers in the UK who plan to visit Asia. As the rollout progresses, UnionPay also plans to offer its credit cards in Europe through third parties such as banks. UnionPay has in recent years expanded internationally mainly in Asia as well as developing markets outside Asia.

Over 7 billion UnionPay payment cards have been issued, making UnionPay the world’s largest payment card issuer. Nearly all of its cardholders live in mainland China.

China announced already in 2014 that it was opening its credit card market to foreign companies and would permit them to establish their own clearing companies. Guidelines to credit card companies on applying for operating licences were published only last year after China promised to open its financial sector to foreigners as part of negotiations with the US. Not one foreign payment card issuer has yet been granted permission to operate independently in China. The Wall Street Journal last spring reported that American Express will be the first foreign card company to receive an operating licence from the People’s Bank of China. A licence was granted to a joint venture that includes Chinese mobile payments provider Lianlian Group.

Despite the rapid increase in mobile payments in China, growth remains robust also in its payment card markets. In January-June, the value of card payments grew by 37 % y-o-y. In addition to payment cards, China had 638 million credit cards on issue. At the end of June, credit card debt was up about 33 % y-o-y to 6.3 trillion yuan (USD 950 billion).