China UnionPay International and Visa Inc. signed a Memorandum of Understanding (MOU) in Shanghai today. The companies will collaborate on payment security, innovation, and financial inclusion, according to a release.
The Chinese government said last year that they would open up the market to foreign payment networks from June 2016. The latest MOU will allow Visa increased access to the market for bank card transactions.
“This is a unique collaboration between two leading industry players to address major challenges facing the payments industry,” said Visa’s CEO, Charlie Sharf. “We are excited to be working together on innovation as digital payments transform commerce, resulting in safer, faster and more convenient ways for consumers to pay.”
Mr. Sharf’s comment on “major challenges” may have been a reference to the growing number of mobile payment systems in China. Last Thursday, Apple Pay joined China’s crowded mobile payment market in an agreement with UnionPay. The market also includes established players such as Alipay and WeChat Wallet. Samsung is planning to launch its own system, Samsung Pay, in China as well.
China’s central bank, the PBOC, also recently revealed they would be considering a bank-sanctioned digital currency, though they have ruled out blockchain in the past.
UnionPay has been working hard to modernize and digitize its services in the face of increasing competition. In 2013, UnionPay partnered with China Mobile to launch its mobile payment service QuickPass for NFC-enabled phones. In December 2015, the company announced separate partnerships with Apple Pay and Powa Technologies, a London-based mobile commerce company specializing in QR code technology.
According to consulting firm China Internet Watch, Alipay and TenPay accounted for 89.1% of the third-party mobile payment market in Q3 2015. Through partnerships, as well as aggressive third-party payment policies, UnionPay is hoping to own more of China’s crowded mobile payment market.