Visa’s dispute with China’s banking card
association, China UnionPay (CUP), has taken a nasty turn with Visa
allegedly banned from starting any new business in the country for
the next year.
The Financial Times cites people
familiar to the matter as its source for this latest development,
and claims the block on new business appears to be a major
contributing factor in the decision to file a case against CUP with
the World Trade Organisation (WTO).
Go deeper with GlobalData
The United States Trade Representative, Ron
Kirk filed the case with the WTO last week over “market access
restrictions and discriminatory limitations on foreign suppliers
seeking to engage in the supply of electronic payment
services.”
“The Chinese government committed to open this
financial service market four years ago, but instead, the Chinese
government is giving CUP a monopoly over most credit and debit
transactions by Chinese consumers,” said Kirk.
“China’s actions unfairly deprive US credit
and debit card companies of access to a huge market.”
Over the last year Visa and CUP have been
locked in battle over Visa’s perceived exclusion from the Chinese
domestic market.
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By GlobalDataCUP refused to comply with Visa’s demands to
stop processing international transactions for co-branded cards
through its own payment system, and the FT reports that it
has since declined to consider any new business with the payments
group according to people in the Chinese bank card industry.
“We have been in China for more than a decade
and we have a long history of working with China UnionPay,” a Visa
spokesperson told the FT.
“While we continue to grow our cross-border
payments business, like all payment companies we look forward to
eventually participating in the domestic payments market.”
With tensions between Visa and CUP showing no
signs of defrosting, MasterCard seems to be slowly edging its way
into the Chinese market.
A memorandum of understanding was signed last
week between MasterCard and CUP which aims to establish “a mutually
beneficial relationship”. They will work together to formulate a
business development plan and will look to co-operate on areas such
as online payment.
