A Rapid Rise

By+deng+Yaqing

Liu ying， a 28-year-old website editor who tends to spend her holidays travelling around the world， just returned from her trip to South Korea with her brother， aunt and cousin.

“Except for meals， we pay all other bills by UnionPay credit card. During the oneweek trip， we spent more than 20，000 yuan（$3，200） in purchasing jewels， designer label handbags， cosmetics and healthcare products. We didnt have to pay a service charge when swiping UnionPay credit cards to make purchases along the arcades in Seoul and had a tax refund remitted to our accounts at the airport for products with tax refund label，” said Liu.

Founded in 2002， UnionPay is the only domestic bank card organization and interbank network in China. At present， the Shanghai-headquartered UnionPay has about 400 domestic and overseas associate members. By now， more than 4 billion UnionPay cards have been issued in the domestic market and 150 foreign countries and regions， with its global transaction volume hitting 41 trillion yuan （$6.56 trillion） in 2014.

Among all the foreign credit card brands in South Korea， UnionPay has experienced somewhat of a miracle in terms of expansion in recent years. According to statistics from the Credit Finance Association， UnionPay now accounts for roughly 60 percent of the amount of consumption made by overseas tourists in South Korea， rising from the 17.4 percent registered in 2011， far exceeding that of visa and MasterCard.

If it is convenient， Chinese tourists now prefer credit cards to cash when shopping overseas， said Sheng Jinchun， General Manager of UnionPay Internationals branch in South Korea.

Since getting off the ground in Hong Kong in 2004， UnionPay has begun to form alliances and promote cooperation to break the monopoly on the global bank card transfer and clearing market held by international card organizations， said Ge Huayong， President of UnionPay International.

Success in South Korea

“To become a global payment brand， a substantial foothold is necessary. As far as UnionPay is concerned， its supporting strength comes from Chinas robust economic development and resident income growth in the past three decades，” said Li Penglin， General Manager of UnionPay International Hong Kong Branch.

As the Korea Tourism Organization （KTO） predicted， the number of Chinese visitors to South Korea could hit 6 million in 2014， a year-on-year increase of 38 percent， rising sevenfold from 2005. “The amount of credit card payments through UnionPay in South Korea exceeded 10 billion yuan （$1.6 billion） in the third quarter of 2014， as opposed to the 100 million yuan （$16 million） registered in 2005，” said Rui Xiaoheng， a financial commentator， who observed that UnionPay has managed to exploit the explosive growth of Chinese tourists and their increasing purchasing power to accelerate its expansion in South Korea.

In July 2013， UnionPay signed a memorandum of understanding with the KTO and South Koreas BC Card Co.， agreeing to jointly establish a consumption service platform encompassing communication， traffic， sightseeing and shopping for Chinese tourists visiting Korea and make quick self-service tax refund available. So far， consumers can make payments through UnionPay credit cards in almost all South Korean merchants and withdraw South Korean won from more than half automatic teller machines （ATMs） in the nation.

Cai Jianbo， CEO of UnionPay International， noted that in recent years， efforts have been made to promote cooperation， improve local card use and refine the entire service system. By joining hands with BC Card Co.， he claimed， UnionPay can substantially improve the user experience by coordinating its service and marketing resources.

As consumer demand becomes increasingly diversified， UnionPay has unveiled a wide selection of personalized services and products， such as tax refunds， cross-border mobile payments and tax-hailing payment services. At the end of 2014， the company announced its decision to team up with Korea Smart Card Co. Ltd.， the issuer of T-Money cards. In the near future， Chinese tourists will be able to pay for public transportation across the whole of South Korea and for purchases in designated areas just by swiping their UnionPay cards.

“Given the strong purchasing power， UnionPay has to make preparations ahead of time. If not， its rivals will gain an upper hand，” said Sheng， clearly reveling in the fact that South Korea has become the most convenient overseas market for UnionPay cardholders and the first choice for Chinese consumers.

“Where there are Chinese tourists， there are UnionPay-branded services. Now， Chinese consumers demand higher quality of services than before，” said Cai， who believes the international popularity of a company lies in its state-of-the-art services rather than its large breadth.

As a matter of fact， its rapid rise in South Korea doesnt rely entirely on Chinese tourists. “As bilateral economic and cultural exchanges between China and South Korea become more frequent， South Koreans demand for yuan settlements is shooting up，” said Rui.

According to statistics from a survey on Chinas banking industry published by Hexun Financial and Communication Research Institute in January， by October 2014， UnionPay had issued over 30 mil- lion cards overseas， one third of which were for South Korea. In other words， on average， one in five South Koreans owns a UnionPay card.

overseas expedition

At present， UnionPay still lags behind visa and MasterCard in terms of international business， admitted Ge， President of UnionPay International. While visa cards can be used in roughly 39 million merchants across the world and 32 million of them are located outside the United States， more than half of the 26 million merchants that allow consumers to use UnionPay cards are based in China.

“For one thing， Chinese people are increasingly longing for overseas shopping； for another， Chinese enterprises have quickened their steps to get themselves out there，” said Ge， who noted that all of the aforementioned have made expanding the coverage and scope of UnionPay services in overseas markets an urgent task.

On November 18， 2014， UnionPay announced its plan to initiate all-round cooperation with Westpac Banking Corp. of Australia， whose merchants and ATMs will be compatible with UnionPay within two years. On November 20， UnionPay established cooperative ties with Immigration New Zealand to provide more streamlined and convenient services for UnionPay cardholders who apply for a New Zealand visa. On November 27， UnionPay reached an agreement with Global Collect， a global payment service provider， on online payment business， which allowed them to cover more airlines and hotels.

UnionPay President Shi Wenchao said the company hopes to accelerate cooperation on emerging business， such as mobile payment and near-field communication payment， and explore business models based on innovative technologies.