China’s Union Pay business model

China’s Union Pay is financial services corporation established in 2002 with headquarter in Shanghai. It has monopoly protected by government. For many years Chinese market was closed to American competition (Visa, MasterCard, American Express etc), which resulted in significant growth to largest payment organizations in world.

According to American Express won permission to operate in China, joint venture created with LianLian. Permission to process and settle payment in Chinese Yuan resulted in permission to establish own payment network.

Union Pay interconnected to all bank’s ATMs, point of sale network and fund transfers. It Provides credit / debit cards for Chinese citizens and for foreigner (for non-citizens only debit cards). Chinese citizens prefer to use debit cards. Around 7 billion Union Pay cards issued worldwide and number expected to reach 9 billion by 2020.

For worldwide acceptance responsible Union Pay International which is subsidiary of Union Pay. Strategically partnered with more that 2000 organization, accepted in 171 countries for payment and issued in 50 countries.

Platform “Shop the World” used for cross-border online payments, more that 10 million retailers outside of China accept it. Cloud Flash app using QR code for contactless payment. Quick Pass used for contactless and hassle-free transactions, inside installed chip. MPOS terminal connects mobile via Bluetooth and complete payment through highly secured wireless gateway.

Union Pay services based on Chinese consumer habits which changed over last three decades as GDP per capita sharply increased, a lot of new products introduced to consumers. Mostly innovation and strong brand reputation creates loyalty. Customers willing to pay for high quality services even during online shopping. For luxury companies Chinese market gives biggest growth comparable with USA and Europe.



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