Visa and MasterCard will be pleased that the WTO ruling on July 16 broadly supported a U.S. Trade Representative complaint that China UnionPay holds a monopoly on yuan-denominated payment cards issued and used in China.
Making inroads into the Chinese domestic payment cards market will still be painfully slow for foreign schemes, however. They will know from their own experiences in other regions that regulatory appeals will delay the process, giving China UnionPay further time to build up its business. To this end, China will almost certainly appeal the WTO ruling — it has 60 days to do so.
Assuming foreign schemes do eventually gain access to China's domestic cards market, they will, according to the latest research from RBR, face a fearsome national champion with strong bank relationships, a massive number of cards in issue and a daunting merchant acceptance network.
Furthermore, there have been suggestions from within China that the government should facilitate a second domestic scheme, so that by the time the market opens up, foreign players could potentially face two sizeable Chinese incumbents.
The new RBR global payment cards research shows that more than half of the 12 percent growth in global payment card issuance last year was in China, and that UnionPay has extended its lead over Visa in terms of the number of payment cards in issue by a full four percentage points.
While UnionPay lags well behind its international rivals in transaction volumes and values, rival schemes will also be concerned about UnionPay's strong expansion into markets such as Hong Kong and South Korea.
It is generally thought that domestic and private-label card schemes present some of the best expansion opportunities for international card schemes, but the latest RBR research shows that such schemes' share of the global cards base is falling slowly. What is more, Brazil and India have recently followed China's lead in championing new domestic schemes in the form of ELO and RuPay.
These schemes have huge potential, are already growing rapidly, and will provide strong competition to the international players — who will at least be able to console themselves with the knowledge that, in those markets, they are competing on a relatively level playing field.