The Chinese payment system has benefited from its expansion in Russia after US rivals left, research shows
Chinese payment system UnionPay has overtaken rival Visa on the global debit card market, research by analytical company Nilson Report has found.
According to the study, UnionPay’s share of debit card transactions reached 40.03% in 2022, while the share of Visa transactions was around 38.8%. The volume of settlements made through UnionPay cards was also bigger, reaching $16.227 billion against Visa’s $14.109 billion.
In 2021, Visa had a larger market share – 39.53% – compared with UnionPay’s 38.68%. The study notes that this was a significant shift in market share from a decade ago, when the share of Visa debit card transactions in the global market was nearly 80%, compared with UnionPay’s 1-2%. At the time, UnionPay was mostly used in the domestic market.
Another payment card system, MasterCard, saw its debit card transactions market share plunge from 39.53% in 2021 to 21.19% last year.
Experts told Izvestia newspaper that one of the major reasons for the surge in UnionPay transactions is the rapid economic growth of the Asia-Pacific region, where the system is widely used.
“The UnionPay system is used most often in China and other countries in the Asia-Pacific region. In recent years, they have been experiencing faster economic growth, which, in turn, has contributed to an increase in the volume of card transactions. Hence the increase in the market share of UnionPay,” Igor Dodonov, an analyst at Finam Group, told the news outlet.
Another factor that propelled the use of UnionPay is its expansion in the Russian market, which came after both Visa and MasterCard left the country amid Ukraine-related sanctions last year, analysts say. Prior to 2022, 4-5% of all Visa and MasterCard transactions were made in Russia. After the companies left, their cards continued to work in Russia, but they could not be used abroad. As an alternative, a number of banks began to work with the Chinese card system. As of early May, seven Russian banks were issuing UnionPay cards.
Yuan gaining foothold in Russia – Sber CEO
Experts also point out that the power balance between Visa and UnionPay is affected by the decline in US GDP growth, which slowed to 1.1% in the first quarter. Chinese GDP grew by 4.5% in the first quarter from a year ago, which, according to analysts, shows that UnionPay is currently in a more competitive environment than Visa.
For more stories on economy & finance visit RT’s business section
You can share this story on social media: