April 01, 2010
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U.S. and China Vie For Card Processing Business, Pt.2
Commitment? What's that?The Bank of China introduced the first credit card to China in 1985 known as the Xie card. The market remained relatively stagnant over the next 15 years mostly due to a lack of adequate card acceptance. In 2001, China agreed to allow access to all debit and credit card payment processors as a condition to joining the World Trade Organization (WTO). At a meeting in 2007, when questioned about not yet complying with the agreement, China said it "did not make any commitment" in regard to credit card processing by foreign non-financial companies. Such companies would include Visa, MasterCard, Discover Financial, and First Data.
China's debit and credit card payment processor UnionPay has a monopoly on the country's market. Although the U.S. companies have complained they are denied entrance into China's debit and credit card payment processing market, UnionPay has access to over 70 countries including the U.S. According to the company's President, Xu Luode, the country expects to continue expanding across the globe with a vision of concurring the entire world. Where have we heard that one before? The Trade Representative's Office continues to pressure China into relaxing some of its policies and allowing U.S. payment processors to enter the market.
Martina Hund-Mejean, Chief Financial Officer of MasterCard said the company is in search of a way to work with China so that MasterCard will be able to provide debit and credit card payment processing. John Partridge, President of Visa, also said in a presentation that the company is looking for a solution to be able to grow the company's domestic business as well. Currently, Visa has over 60 million co-branded cards in circulation in China's market. Neither China's Commerce Ministry or its Washington Embassy had much to say about the situation. The embassy indicated that they were unaware of any complaints. Meanwhile, U.S. officials plan to move forward in pursuing the issue.