China UnionPay bets big on mobile payment

Bank card operator China UnionPay is banking on innovation, especially in key sectors like Internet and mobile payment services, for sustained business growth this year, according to a top official.

UnionPay attaches great importance to online payment services because a growing number of people in China will use mobile phones instead of bank cards for payment, Ge Huayong, chairman of China UnionPay, said on the sidelines of the Asian Financial Forum in Hong Kong on Tuesday.

The company is developing a digital wallet to enable its clients to make purchases or book tickets online with their mobile phones. It is also holding talks with domestic telecom operators to offer seamless cash payment services, or in other words services that enable UnionPay cardholders to make payments without credit or debit cards in certain supermarkets.

In Hong Kong, for instance, UnionPay will step up its efforts to boost business innovation including contactless payment and mobile payment facilities to satisfy the demands of young cardholders. It has reached agreements with many local merchants and major progress in small amount payments is expected this year.

Another priority for UnionPay this year is to further expand its international business. Currently, more than 4.7 billion UnionPay cards have been issued worldwide and the UnionPay acceptance network has expanded to 150 countries and regions outside the Chinese mainland.

UnionPay cards are accepted by more than 23 million merchants and 1.8 million automated teller machines globally. The development of its overseas business has benefited greatly from outbound tourism. About 110 million Chinese traveled abroad in 2014, Ge said.

"Our target is to become an open, platform-style comprehensive payment service provider with global influence," he concluded. "We are open to cooperation with any partners including major domestic Internet companies."

China has taken a step toward easing its grip on credit cards. The State Council said in a statement in October that qualified foreign and domestic companies can apply to set up bank card-clearing operations. The move is part of the efforts to open up China's financial sector.

Scott Valentin, managing director of specialty finance research with FBR Capital Markets, a US-based investment bank, said the decision could be a boon to the Chinese operations of American mainstays like American Express Corp, MasterCard Inc and Visa Inc.

"The Chinese are agreeing to open up the market to allow for competition, which would mean Visa, MasterCard and others could operate within China for network access," Valentin said.

Ge said: "We hold a positive attitude toward the opening-up of the domestic financial market. It will promote the development of companies and improve corporate efficiency through competition. The so-called protectionism against other electronic payment processors is actually a matter of standards in a certain sense. As a bank card association, UnionPay has its own technical and business standards, just like our global competitors."

Today, many third-party payment processors have started developing the same business as a bank card organization. Ge said he hopes to compete with them under the same regulatory requirements and standards.