June 01, 2010
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News: Visa Bans Int'l Banks Using UnionPay
International banks that use UnionPay Co., to process debit and credit card transactions have been ban from processing Visa transactions. Visa, Inc. the world's largest debit and credit card network is not happy with Chinese regulators who have made it difficult for the company to grow its share of the card market. UnionPay Co., China's largest debit and credit card payment processor allegedly has been giving currency exchange discounts to cardholders for international transactions. The action is aimed at reinforcing Visa's rules that protect all of the company's cardholders worldwide. An effective date for the ban has not yet been disclosed.
Critics say that Chinese regulators have allowed UnionPay to monopolize the Chinese market which is one of the fastest growing debit and credit card markets in the world. The move will most likely push many international banks into a corner and force them to decide between the two networks. Despite the fact that the ban could be viewed as a direct attack against UnionPay, Liu Jie, the Visa spokeswoman said a lack of adequate training of settlement bank clients has led to a number of irregularities which warrants the necessary action in resolving the problems. Meanwhile, as training issues and conflicts are being addressed, credit cardholders and international banks appear to be the pawns between the two major forces.
Visa's actions appear to be in response to a U.S. Trade Representative's failed efforts to convince global credit card companies to take a united stance against China in the World Trade Organization for allowing UnionPay to monopolize the card market. Speculation is that foreign banks fear the repercussions of confronting the powerful Chinese regulators. Some also believe that Visa is firing back at China over the cancellation of its 2008 Olympic cards. Visa dumped big bucks into the games as a major sponsor which allowed the company to issue cards that could be used inside the game arena.