With 2.6 billion China UnionPay cardholders and 1.2 million Elavon Global Acquiring Solutions merchants worldwide, the math simply added up for an agreement that would enable Elavon merchants to accept UnionPay cards, an Elavon executive says.
And one analyst sees the agreement sparking a wave of other processors also wanting a piece of the China market.
Elavon, a global payments provider and subsidiary of Minneapolis-based U.S. Bancorp, announced Aug. 2 it had signed a binding agreement with China UnionPay, China’s national bankcard association, to accept UnionPay-branded cards at Elavon merchants in the United States, Europe and Canada.
“With UnionPay’s 2.6 billion cardholders and the growing desire of Chinese people to travel, combined with China’s growing economic status, we think it is a great partnership and perfect match for both companies,” Gerry Tilson, Elavon vice president of global business innovation, tells PaymentsSource.
The UnionPay card becomes part of Elavon’s international credit card processing for merchants, which includes funding, settlement and reporting for cards backed by Visa Inc., MasterCard Worldwide, American Express Co. and Discover Financial Services.
Because of Elavon’s significant involvement in international transactions, the agreement with UnionPay took only six months to finalize, Tilson says.
“There were some currency-conversion issues to work out behind the scenes, but nothing will be apparent to the merchants or consumers,” Tilson says. “The merchant and consumer experience will seem like any other transaction because of our single point of processing for all card types.”
Mike Passilla, Elavon president and CEO, was in China with other Elavon executives to sign the agreement, according to Elavon spokesperson Holly Lytle.
But he made a statement through a company press release. “Elavon is elated to support the expansion of China UnionPay card acceptance while promoting their international brand and supporting new opportunities to serve Chinese travelers, one of the fastest growing segments of the tourism market,” Passilla said.
Adil Moussa, a senior analyst at Aite Group, a Boston-based consulting and research company, views the Elavon and China UnionPay agreement as vital to merchants around the globe. “As more Chinese nationals are traveling to the U.S. and more Chinese people are adopting cards, it remains essential for merchants to be equipped to take [UnionPay] cards and capture that fast-growing Chinese market, just as it was in the late 1980s and early 1990s with JCB and Japanese cards,” he says.
The Elavon-UnionPay agreement also may result in a new wave of competition, Moussa says. “I believe we will see a big rush from other processors to offer [UnionPay card acceptance] in order not to remain at a disadvantage, especially large processors with merchants in states that get the most Chinese visitors.”
For China UnionPay, the announcement comes a month after an agreement in which MasterCard will process online payments made with a UnionPay card outside of mainland China.
But U.S. companies wanting to work in China face a difficult regulatory climate.
