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If only Europe was Chinese

I’m in Moscow today at a forum on cards and payments.

The morning was quite interesting and challenging as there is dual language – English and Russian – but translation services never quite translate correctly.

For example, as I told my favourite story about turning bankers into zombies, I got the feeling it wasn’t being translated particularly well as everyone was frowning at me.

Maybe they had said that I thought all bankers were zombies or something, as if I would say such a thing.

Anyways, the morning went ok and then there were a couple of presentations that stood out.

The first was talking about creating a new card system and the challenges Europe had found with trying to do such a thing.

As most of us know, the EU cards scheme under SEPA never happened.  EAPS and other things have appeared and seem to disappear just as fast.

The main message was that a card scheme needs 10 billion transactions a year as a minimum threshold and the fact we did not achieve this is the reason why Europe never succeeded in breaking the Visa-MasterCard duopoly.

This presentation was counteracted by the next from China UnionPay. 

What was particularly impressive about this presentation was not only that Sasha Fan, a Chinese representative for China UnionPay in Moscow, presented his whole presentation in fluent Russian, but that the ambition of China UnionPay is impressive.

Their aim is to become the third card scheme, recognised internationally in the same way as Visa and MasterCard.

And they look likely to achieve that having grown impressively:

  • China UnionPay has seen a fourfold increase in card growth, from 649 million cards issued in 2003 to 2.4 billion cards issued this year
  • Countries accepting China UnionPay are up from 27 in 2007 to 104 by March 2011, with many international bank partners including HSBC, Citi, Bank of America, Standard Chartered, NETS, Santander and more
  • The first international issuer of China UnionPay cards was the Bank of China in Hong Kong in 2006, and there are now 69 international issuers in 27 countries 

What is the difference here?

I guess there are many.

Europe is a disparate territory of 27 + 4 countries that can’t even agree on what infidelity means, let alone a card scheme.  It is a region of mixed around 700 million people who differ in cultures, attitudes, views, beliefs and more.  There is little in Europe that glues the whole together.

China on the other hand is a nation of 1.2 billion people who are organised as a whole.  The nation moves as a whole, can implement things as a whole, and can stop things as a whole.  The People’s Republic of China (PRC) can make China UnionPay successful by blocking Visa, MasterCard and AMEX, and then use their clout to push China UnionPay overseas as a major force.

Oh how the Eurocrats wish they could do the same.



About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • Why does a card scheme need 10 billions of transactions? There’s a lot of overhead in the business models of the Visa and Mastercard.

  • Luka Milisa

    Dare I say this – the reason why China’s 1.2 billion can appear to move in unison is not so much that of cultural togetherness (there are very strong local differences in China, but even at macro level – east vs centre, south vs north, Shanghai vs HK vs Beijing – this is not as much a homogeneous nation as what gets typically portrayed in the Western media), but one of strong central government – thing that is non-existent in Europe.
    Yes – socialism does indeed make it easier to create markets – the winners of which compete internationally!

  • Visa and MasterCard need to focus on their members or investors needs, NOT each other. Their ridiculous spend on their own brand and sponsorship of ANYTHING to get their name in lights is one of the many reasons they FAIL. Europe is equally broken and dysfunctional. Go back to the past to fix things – keep it simple and focus on the customer…..they are the ones who ultimately pay the bills. The EU (all things, parliament, rules, currency) is just one huge gravy train for a minority at the expense of ALL. CUP will prosper because of mindsets like “EMV” which has gone nowhere in the last 15 years = US and chip card – ask Visa US????