From the point of view of a consumer in Myanmar, there is little difference between carrying a Visa and a UnionPay card — which is likely why the small Southeast Asian nation is “ground zero” for UnionPay’s attempts at expansion outside of China’s borders. Only 2 percent of the population carries plastic cards at present.
Myanmar is not alone in UnionPay’s push to the frontier — Indonesia, Malaysia, Kazakhstan and even the Democratic Republic of Congo have all seen cards issued by the Chinese company begin swirling in their marketplaces.
“For many people in emerging markets, this will be the first card they come in contact with,” said Neil Katkov, senior vice-president at finance consultant Celent in Tokyo. “That’s a big shift from when Visa and MasterCard were the only game in town.”
Over the last decade and half, UnionPay has grown into the largest bank card group in the world by value of transactions, taking a 37 per cent chunk of the $21.6tn global payments market in 2015. But that size is based on a user base that is almost wholly Chinese, since state-controlled UnionPay is the only plastic game in town due to a de facto monopoly in-nation that has been the subject of a years-long fight with the WTO.
Outside of China, UnionPay claims just 0.5 percent of the global market, compared with Visa’s 50 percent and MasterCard’s 31 percent.
But UnionPay has bigger ambitions.
“This is an effort to expand China’s financial influence globally,” said Simon Lee, an assistant dean at the Chinese University of Hong Kong Business School. “The recognition of Chinese brands, especially in finance, is very low abroad. Companies like this are trying to change that.”
Since launching UnionPay in 2002 with a consortium of state-owned banks, China’s central bank has blocked the domestic expansion of Visa and MasterCard within China — giving Union Pay an advantage getting to scale. The cards saw their first international exposure as wealthy Chinese tourists began expanding their international travel and shopping.
In 2012, the World Trade Organization ruled that China had unfairly discriminated against foreign payment companies — and though China has announced it will open its market to foreign networks, complaints have abounded that they are dragging their feet.
“Increasingly, China UnionPay is competing on a global scale. They will need to play along with the global rules,” said Alfred Shang, a financial services partner at Bain & Co in Beijing who has advised multinational payment companies on their China strategy. “They are trying to strike reciprocal rules with other payment networks around the world, so they need to be seen as playing by the rules.”