The biggest issuer of credit cards in terms of purchases, American Express Co., is of the opinion that a deal with UnionPay Data Co. from China, will help processing more transactions using its global payment network. According to James Tobin, who is the spokesman for the New York based company; UnionPay is looking for people who would acquire merchants for credit cards outside China. A memorandum has been signed by both the companies to expand the current relationship and find new avenues to collaborate in worldwide markets.
UnionPay is a monopoly sanctioned by the government and is based in Shanghai. The payment networks from the US, which have been shut out of China, are trying to find ways to build relationships with the Chinese card payment processor. There are reports that even MasterCard Inc. has signed a deal with UnionPay, which could enhance its revenue making ability. Currently Discover Financial Services, based in Riverwoods, Illinois is the only card payment processor for card transactions of UnionPay in the US.
By 2020, China is expected to race ahead of the US in terms of the number of credit cards, with 900 million cards in use. The total number of credit cards is expected to climb by 11% each year, even as the transaction value climbs 14% every year until 2025, according to reports from MasterCard. The Obama administration had complained to the WTO against China, which has barred foreign companies including Visa and MasterCard from processing payments in its market. Visa, which is the biggest payment network, had a clash with UnionPay a few months back, when it asked merchants and banks to use its system for processing transactions by Chinese cardholders, with cards of both brands. UnionPay complained that Visa does not have the right to block use of dual currency credit cards internationally.
In fact, over the last few years, UnionPay from China and American Express have collaborated in China, where credit cards of American Express are run on the UnionPay network. Now with the New MoU, the companies are looking forward on developing new areas to cooperate in markets outside China. The memorandum seeks cooperation between the two companies in their efforts to expand and explore opportunities outside China. UnionPay was established in 2002 and plays a pivotal role in the bankcard industry of the country. The number of credit cards issued from UnionPay has crossed 2.3 billion dollars.