MasterCard hopes tie-up with China UnionPay to open wallets

* MasterCard seeks to be a debit card player in China

* Card payment market to grow at least 15 pct in 10 years

* China UnionPay has 1.4 billion debit cards in circulation

By Terril Yue Jones

BEIJING, Jan 17 (BestGrowthStock) – MasterCard Worldwide’s (MA.N: )
partnership with China UnionPay, the country’s lone bank card
transaction processor, will help it become a player in China’s 3
trillion yuan ($455 billion) personal consumption market in five
to 10 years, the head of MasterCard in China said on Monday.

The card payment market will grow at least 15 percent over
the next 10 years, Ling Hai, MasterCard’s president for the
Greater China region, said in an interview.

That will further boost what Ling called China UnionPay’s 1.4
billion debit cards in circulation in China, an enormous business
opportunity of which MasterCard hopes for “a bigger chunk,” he
said.

Of the 3 trillion yuan, “China UnionPay processed one-third
of that. There’s another two-thirds that’s cash,” Ling said.

“So I’ve got opportunities on two fronts. One, the
penetration of electronic payment is still low. Cash is still
king, and I’ve got a tremendous war I can declare against cash.

“Secondly, that 3 trillion is going to continue to grow,”
even at the most conservative estimates of GDP growth of 5
percent this year, Ling said.

MasterCard and China UnionPay signed a memorandum of
understanding last September to explore cooperation including
domestic transactions and online payment. The two sides are still
discussing ideas but do not yet have anything to announce.

Foreign credit card companies are barred from transactions in
the domestic debit market, and only larger merchants, hotels and
certain other establishments in China accept foreign-issued
plastic for credit transactions.

“In Europe, CUP (China UnionPay) is not accepted everywhere.
Our network can help China UnionPay cards to be more accepted,”
Ling said. “In China, inbound international cards are not
accepted everywhere. China UnionPay can help us be more
accepted.”

He wouldn’t give revenue figures or targets for China, or
address a target number of cards or turnover volume, but said
that China still represents only a small part of MasterCard’s
worldwide business.

The same month that MasterCard and China UnionPay signed
their MOU, the United States filed a complaint with the World
Trade Organisation prompted by larger rival Visa International’s
(V.N: ) frustration at being shut out of what it described as China
UnionPay’s monopoly over card services in China.

As for MasterCard’s approach, “we understand this market well
enough to know that to be successful you’ve got to follow the
rules, and you’ve got to play nice with the government,” Ling
said.

(Additional reporting by Jenny Su; Editing by Ken Wills)