With China UnionPay deal, Amex to handle more... - Other News


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Credit Card Applications » News » Other » With China UnionPay deal, Amex to handle more transactions

With China UnionPay deal, Amex to handle more transactions

With China UnionPay deal, Amex to handle more transactions
The content is accurate at the time of publication and is subject to change.

American Express (AmEx) the major credit card giant, has said that its China UnionPay deal would be instrumental in processing more transactions in the global market. James Tobin, spokesman for AmEx was quoted as saying that the two companies had signed the Memorandum of Understanding (MOU), where they would expand their networks globally and find new ways to enter markets outside China.

Payment networks from the U.S. that have been shut out of the card-processing market in China, are on the lookout for other means in order to build a partnership with UnionPay – based in Shanghai. UnionPay is a (government-sanctioned) monopoly, and MasterCard`s present deal with UnionPay will help in boosting the revenue for both firms. Presently, the only payments networks that process UnionPay transactions in the U.S., is Discover Financial Services.

It is estimated that China would be a major player in the credit card network by the year 2020. It would take over the U.S., whereby it is estimated that there would be approximately 900 million cards in circulation. As per estimates by MasterCard, there will be an increase of 11% each year in the total number of cards, and there would be a 14% increase in the transaction value annually, up to the year 2025.

A complaint has been filed with the WTO (World Trade Organization) by the Obama administration against China for restricting the entry of foreign companies such as Visa and MasterCard in the payment-processing sector. There was a clash between Visa and UnionPay in the month of June, when the company asked merchants as well as banks to process the international transactions through its systems when it comes to Chinese cardholders who use cards that carry the brands of both the companies. UnionPay insisted that the use of dual-currency cards abroad could not be blocked by Visa.

This dispute is largely due to Visa`s dissatisfaction with the way it is treated in the credit card market in China. Visa has very limited access in China`s market. This treatment by China would certainly affect the cardholders in China, especially ones who travel overseas. This may result in higher fees. However, it is a known fact that neither of these companies have the right to unilaterally limit any cardholders` choice when it comes to payment options.

There was no comment however from Yanmei Wang, the UnionPay spokesperson.

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All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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