Following the suspension of payment operations by Visa and MasterCard in Russia, some Russian banks announced on Sunday, March 6 2022, that they will soon switch to the Chinese UnionPay card operator’s system along with its own Mir network.
This means that participating banks including Alfa-Bank, Sberbank, and Tinkoff, will make UnionPay the new payment platform.
Experts say Russia’s exclusion from Visa and Mastercard card payments could see competition for Asia, as well as a wide acceptance from other countries that are yet to use the platform.
What is Unionpay?
UnionPay is China’s first financial-level pre-authorization service for secured transactions, a digital payment method that processes the transactions carried out on credit cards from banks, and merchants.
Research shows that UnionPay has the largest share of global card expenditure, with 45 percent, which is largely driven by spending in China, the world’s largest market, where UnionPay accounts for 93 percent of the total.
In comparison with MasterCard and Visa, UnionPay’s factors to consider would be its wide acceptance, the foreign-currency exchange fees when used in other countries, and the benefits of using one over the other.
According to RBR’s report, Visa (including Visa, Visa Electron, V PAY and Interlink) made up 20 percent of the world’s cards at the end of 2018. Mastercard (Mastercard, Maestro and Mastercard Electronic) accounts for 16 percent of all cards and the trend towards greater issuance of the main brand is similar to that of Visa.
UnionPay operates in more than 180 countries across the globe, including Switzerland, Greece, Italy, Spain, Germany, Mexico, Cyprus, Thailand, India, Israel, Portugal, Croatia, Poland, Serbia, Hungary, and Austria.
Russia’s inclusion will drive acceptance
China, UnionPay’s headquarters, is the largest country issuing payment cards. According to recent data from Worldbank, Russia has a population of over 144.1 million. This switch will call for more countries to begin to consider Unionpay as a payment means to run business activities. Also, the traction gained by the payment system worldwide is proof of the trust it has earned among member nations.
While Visa and Mastercard are the only network payment processors involved in all three areas of the payments market, working exclusively as network processors, research shows that Unionpay is covering a larger part of the market. UnionPay is the second most circulated payment card worldwide which shows the extent of its reach well above Visa and Mastercard.
With Russia’s inclusion, countries who are in business transactions with the country might begin to see a need for UnionPay’s adoption since there are no alternatives if there must be transactions with Russia.
UnionPay QR payments are accepted by over 30 million merchants in the Chinese mainland. Over 2 million merchants in 44 countries and regions outside the Chinese mainland in Asia Pacific, Central Asia, South Pacific, Middle East, Africa, and North America take UnionPay QR payments.
Besides, the App users can use UnionPay mobile QuickPass at over 11 million POS terminals in 92 countries and regions including Japan, Singapore, Australia, New Zealand, Canada, and Russia.
Experts see China as a welcome alternative and this could mean UnionPay might gain entry into Africa judging by one of China’s knack for befriending those in need of alternatives.