AmEx Aims to Handle More Transactions With China UnionPay Deal - 19Nov 2010
American Express Co., the world’s biggest credit-card issuer by purchases, said an accord with China UnionPay Data Co. may help AmEx process more transactions on its global network.
“What they’re looking for is people to acquire merchants for their cards outside of China, and they don’t have an acquisition network outside of China,” said James Tobin, a spokesman for New York-based AmEx, in an interview today. The two companies signed a memorandum of understanding to expand their current relationship and seek new ways to cooperate in markets worldwide, AmEx said in statement.
U.S. payment networks shut out of China’s card-processing market are still looking for ways to build ties with Shanghai- based UnionPay, a government-sanctioned monopoly. Mastercard Inc. has said it signed a similar deal with UnionPay that may help boost revenue for both firms. Discover Financial Services, based in Riverwoods, Illinois, is the only payments network that processes UnionPay card transactions in the U.S.
China will overtake the U.S. as the largest market for credit cards by 2020 with about 900 million cards in circulation, Purchase, New York-based MasterCard said on Sept. 10. Total cards likely will increase 11 percent a year as transaction value climbs 14 percent annually until 2025, according to MasterCard.
The Obama administration has filed a complaint against China with the World Trade Organization for barring foreign companies, including MasterCard and Visa Inc., from its payments processing market.
Visa, the world’s biggest payments network, clashed with UnionPay in June when the San Francisco-based company told banks and merchants to use its system to process international transactions by Chinese holders of cards that carry both companies’ brands. UnionPay said Visa doesn’t have the right to block the use of dual-currency credit cards abroad.
Yanmei Wang, a UnionPay spokeswoman, didn’t immediately return an e-mailed request for comment.
By Peter Eichenbaum (Bloomberg)