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The Shanghai-based UnionPay International payment network reported Monday that it now has 28 million accepting merchants outside of China and 120 million cards issued by non-mainland financial institutions since it launched its global business in 2004.
But while UnionPay International now has a presence in 176 countries, with Chile and Bosnia and Herzegovina just added, its merchant network still lags the acceptance base of Visa Inc. and Mastercard Inc. Visa this week said it has nearly 54 million acceptance locations worldwide. Mastercard’s base is roughly the same since merchant acquirers typically sell acceptance of both bank card brands in one package.
UnionPay’s strategy outside of Southeast Asia has been to pursue acceptance agreements with acquirers in countries that are destinations for Chinese tourists and business travelers. “In Asia, UnionPay payment is available in about 90% of the merchants; UnionPay cards can be used in 90% of countries and regions in Europe,” UnionPay said in a news release. The company also boasted that in Russia, “the overall acceptance rate of UnionPay card will reach 100% within the year.”
In the U.S. and Australia, UnionPay said its credit cards are now accepted by 90% of merchants. UnionPay’s efforts to crack the U.S. date back to late 2005, when it struck an agreement for acceptance on Discover Financial Service’s Pulse debit network. The company then went on to forge acceptance agreements with various U.S. acquirers, including one in 2017 with the nation’s biggest merchant processor, First Data Corp., now part of Fiserv Inc.
UnionPay’s new merchant numbers are actually lower than the 41 million merchants it claimed in March 2017. So what happened to 13 million merchants? Given the company’s aggressive growth in recent years, a major loss of merchants seems improbable. The more likely reason is a difference in how merchants are being counted, or an overstatement of merchants earlier on. Digital Transactions News attempted to get clarification from a spokesperson at UnionPay’s Americas headquarters in Jersey City, N.J., but telephone calls to that office were not answered.
UnionPay seems unlikely to reach the ubiquity of Visa and Mastercard, at least in the near term, according to Eric Grover, a consultant familiar with the international payments scene and principal of Minden, Nev.-based Intrepid Ventures. “Yes, it’s ‘global’ in the sense of having an acceptance footprint outside China, particularly in countries and corridors with significant Chinese tourist and business traffic,” Grover says in an email message. “China’s the world’s biggest outbound tourist country so it’s not hard in, say, London, Singapore or New York City to persuade acquirers to offer and hotels and restaurants to accept [UnionPay]. However there’s no meaningful issuance in the Americas or Europe. Most of [UnionPay’s] issuance outside China is in adjacent markets in East and Southeast Asia.”
