Visa Inc. is asking its member banks to stop using China UnionPay’s system to settle international transactions initiated with bankcards bearing both the Visa and UnionPay logos, China’s official state-owned newswire Xinhua reports.
According to the news agency, Visa is warning member banks they face hefty fines if they process through China UnionPay’s clearing system transactions on dual-currency credit cards that carry both brands’ logos outside the Chinese mainland.
UnionPay is condemning Visa’s action, saying in an official statement that no party has the right to restrict the payment channels bankcard holders choose to use.
For consumers, this would mean extra charges, as customers using the Visa-UnionPay card outside of the Chinese mainland face a 1% to 2% currency-transfer fee on each purchase, according to Xinhua
Visa officials were not immediately available to comment. However, a Visa spokesperson told People’s Daily Online that the company has not set a timetable for enacting the prohibition against its member banks and that it does not plan to block the overseas clearing of standard UnionPay credit cards. The spokesperson told the local newspaper Visa is enforcing an existing rule, and any new bank joining Visa’s network would have to comply.
The conflict between Visa and China UnionPay was unavoidable, Mrinalini Manral, payment analyst with India-based Dassler Business Intelligence, tells PaymentsSource. “China UnionPay is expanding overseas at a very rapid scale and still holds a iron-like grip on the domestic market,” she says. “Hitting UnionPay overseas is like payback and a way to maintain overseas domination.”
China UnionPay has expanded its overseas presence at a very fast pace since its inception in 2003, and it has riled some of its international competitors (
Some 54 million Chinese consumers will travel overseas this year, up 11% from 2009, with overseas spending reaching US$48 billion, according to China National Tourism Academy.
