We are used to thinking that MasterCard and Visa are the most widespread pay cards in the world. There is a Chinese payment system, however, that has issued an impressive number of cards indeed. The number exceeds 9 billion cards, which is more than the total population of the globe! Besides, it is more than the number of MasterCard and Visa cards taken together. Great progress for a company whose share of the market was almost negligible only 10 years ago.
What is China Union Pay?
The official name of the company is China Union Pay Ltd. and it is a state-owned Chinese company that provides payment services. The company issues plastic pay cards and it provides opportunities for online money transfers too.
The fact that the company is owned by the state has both pluses and minuses. On the one hand, the Chinese Government efficiently regulates the activities of the company and it guarantees that the payment system will work stably in all circumstances. On the other hand, the Chinese authorities have full access to the personal information of card users as well as users of the online payment application.
Types of cards that China Union Pay issues
China Union Pay issues all types of cards: personal, corporate, credit, debit, and prepaid cards. A prepaid card works similarly to a debit card: you put your own money on it and then you can gradually spend it using your prepaid card as a handy payment instrument. There is a difference between the two types of cards, however. Namely, you don’t have to open a bank account if you want to use a prepaid card: you can simply pay some cash and buy it! Moreover, a prepaid card can be anonymous. An anonymous pay card does not carry the name of its holder, which can be important for personal security reasons in some situations.
Union Pay in China
You probably won’t be able to get around in China if you don’t have a Union Pay Card. First, everybody uses the cards in the country. More than 90% of people in China have a Union Pay card or two. More importantly, however, Visa, MasterCard, and other international payment systems are not functional in China. That is to say, you will have to acquire a Union Pay card if you travel to China for business or pleasure.
As far as the online payment application is concerned, China Union Pay is not the most popular such application in the country. Applications such as Alipay, for example, are used more often in the country. Anyway, about a quarter of the Chinese who make online payments use the Union Pay platform for this purpose.
Union Pay outside China
Over 9 billion pay cards issued by Union Pay may be an impressive figure indeed but most of the cards are issued and used inside China. Only around 200,000 Union Pay cards are in circulation in other parts of the world. This means that Visa and MasterCard remain the most widely used payment systems in places other than China.
This said, however, China Union Pay Ltd. is pushing hard to conquer foreign markets. The company makes agreements with banks in other countries of the world and the banks start issuing China Union Pay cards. That is, you don’t have to go to China if you would like to obtain a Union Pay card. Several European banks in particular issue the cards too.
Uses of China Union Pay cards
By the time the company was launched by the Chinese Government, citizens of China had already started to actively travel around the globe. Because MasterCard and Visa were (and they still are) unavailable to them, they had trouble making payments in foreign countries. They needed an efficient payment instrument that they could acquire before going abroad and Union Pay became such an instrument. This was the central reason why China Union Pay Ltd. was launched: to make life easier for Chinese tourists traveling to foreign countries.
While issuing plastic cards was not a problem for the Government of China at all, it was facing a much more challenging task. In particular, it had to make the cards accepted in foreign countries. Thus, it started making agreements with various tourism-related businesses in popular tourist destinations. Hotels, car rental companies, restaurants, and other tourist-oriented companies in Europe, America, and elsewhere gradually started to accept Union Pay cards.
It is easy to understand why they did so. A traveler is a person prepared to spend money. A Chinese traveler in particular is someone prepared to spend quite a lot of money because he or she can afford it. Even though we’ve been hearing that the Chinese economy is under threat at the current moment, the number of Chinese tourists quickly picked up after the pandemic and it is large again. If it is a popular tourist destination in Europe or America, you are almost guaranteed to spot a group of tourists from China if you walk around the place for less than an hour. The Chinese economy may be under threat but the Chinese people are still traveling actively. And they are not stingy!
In addition to Chinese tourists, there is also a large number of Chinese students in Western Europe, Canada, and especially the United States. More than 300,000 students from China currently attend various American universities.
What is more, over 2 million immigrants from China live in the United States of America. It would be too bold to claim that all of them prefer using China Union Pay cards but many of them do anyway. A Chinese immigrant will maintain close ties with his or her relatives living in China, as it is very easy to do so in the age of advanced communication technologies. And Chinese immigrants in the USA do not send only email messages to their relatives back home: they send money to China and receive money from there.
We cannot say how much money travels between China and North America every year but it should be trillions of dollars. What happens if an American-based company does not accept Union Pay cards? It misses out on Chinese customers, both tourists and local residents. What happens if you don’t have a Union Pay card? You don’t have a payment instrument that is preferable for your Chinese partners.
You probably do not need a China Union Pay card if you have nothing to do with the Chinese whatsoever. If you do have business with some people from the Celestial Empire, you must have a Union Pay card.