Maverick China Research - Maverick China Research

In addition to debit cards and credit cards, China UnionPay (a.k.a. China's version of Visa and MasterCard) also directly offers payment services through mobile phones, the internet, and fixed line telephones. China UnionPay, or CUP, offers these services through subsidiary companies - UMPay, Chinapay, and Shanghai Cardinfo.

The existence and direct involvement of CUP in non-bank card payment channels is a reflection of the unique environment in which payments options are developing in China. For example:

• Credit card issuance, while growing quickly in recent years, is still very low - an estimated 50 million cards in circulation. By comparison, over 640 million credit cards are in circulation in the United States.
• While over one billion debit cards have been issued in China, only 600,000 merchants nationwide accept card payments and only 800 ATMs and POS terminals are available per million people so access points are low.
• At the same time, China has over 500 million mobile subscribers and over 170 internet users.

Many payment companies, including CUP, see potential in offering payment services directed at these two user groups. Given the immaturity of the bank card payment industry in China, the opportunity is there for alternative payment channels to develop into a mainstream payment option for consumers.