Russia Launches China UnionPay Credit Card

unionpay

Russia launches China UnionPay credit card (RT, Aug 15, Edited Aug 18, 2014):

Forget Visa and MasterCard. After the two American credit system payment companies froze accounts without notice in March, Russia has been looking for an alternative in China UnionPay.

China UnionPay plans to have 2 million cards in Russia in the next three years.

Instead of seeing the small Visa and MasterCard logo on credits cards, ATMs, and retail outlets, Russians will start to see the three words “China. Union. Pay.”

China UnionPay first emerged in 2002 on the domestic Chinese market as an alternative to Visa and MasterCard, but quickly expanded internationally, and now is already number one in terms of quantity of cards in the world.

Russia’s biggest banks – VTB- Gazprombank, Promsvyazbank, Alfa Bank, MTS, and Rosbank- are already making technical preparations, running tests on Union Bank cards.

“VTB24 already serves China UnionPay cards in its ATM network and now the bank is in negotiations with this payment system to start acquiring retail merchants,” VTB24’s press office said in a statement.

Most banks just began their relationship with China by offering clients corresponding services- none of the bankers imagined that they would be issuing Chinese credit cards.In March, both Visa and MasterCard blocked the accounts of cardholders at BankRossiya and SMF Bank, both which were sanctioned by the US over Russia’s involvement in Crimea.

Russian financiers who used to keep their assets in dollars and euros were shocked by the event, and moved their capital back to Russia out of fear one day all their assets would be blocked by politicians in Washington DC.

“Visa and MasterCard have 100 percent trust, but right now, there is no trust in the system, and many, even our clients, have shifted their transactions from American dollar and Euro to Yuan. They are eager to receive this card- we already have a big list of people waiting to get this card instead of MasterCard and Visa,” Denis Fonov, Deputy Chairman at LightBank, a small Moscow-based bank, told RT.

LightBank was working with UnionPay long before it knew the cards would be coming to the Russian market – and ordered 10,000 cards pre-emptively as a side service for clients.

As a result of the freeze, Visa and MasterCard will now have to pay a security deposit to Russia’s Central Bank, which is estimated to be billions for each company. Similarly, once UnionPay begins operating in Russia, it will also put down a security deposit with Russia’s Central Bank, about $3-4 billion, Fonov said.

 $5.3 trillion in payments

There are already 20,000 cards in circulation in Russia, and a second order of 100,000 cards is planned for September. In Russia many banks accept UnionPay cards, but not merchants, that’s the next step.

By the beginning of 2014, the payment system had already issued 4.2 billion cards, mostly in China.

In terms of total world trade turnover, China UnionPay is the leader in debt cards, with over $5.3 trillion in payments, or about 47 percent of the market share, whereas Visa has 40.6 percent, and MasterCard only 12.2 percent, according to the Nilson Report.

In overall transactions, Visa is still the leader with $4.6 trillion, and China UnionPay comes in second with $2.5 trillion in transactions in the first half of last year.

UnionPay already successfully operates in Australia and Canada, with their deposits tied to both the local currency and the yuan. In total, UnionPay operates in 142 countries.

China’s UnionPay will be a temporary solution for Russia to detach from the West while it prepares to launch its own payment system, which officially isn’t slated to begin operating for another 16 months, and according to sources in the industry, it could even be 2-3 years out.

 

5 thoughts on “Russia Launches China UnionPay Credit Card

  1. I find it amazing people don’t seem to recognize the portend of what is happening in the east. Putin is smoothly, efficiently and mindfully setting up a alternative to the western economy……and nobody wants to see it.

    I checked US media briefly this evening, all of them were on the rioting in Ferguson, no other story being addressed.

    What Putin is doing is economically undermining the west on every level. He set up the BRICS fund to loan money to smaller countries who want freedom from western financial domination. Not a word is said in western media, regardless of the amount E100 Billion. That is a lot of money.

    China is going to provide appliances, vehicles, computers, semiconductors, (they have cornered the market on rare earth minerals, they stopped selling them to the west in 2010…..the same year they dumped the dollar) and every other thing the east might need. It will help China out of the financial mess they are in.

    Food will be provided by Brazil, Africa, and other places.

    What does the west do? Bomb Iraq and pretend none of this is happening. The rigged market went up nearly 160 points today because of the bombing in Iraq…..it is insane.

    The EU will soon have to make a choice…….and if they go with the east, the dollar will collapse…..the EU is the only thing keeping it afloat.

    We have total idiots in power.
    Thanks for publishing this very pertinent story.

  2. One other point. By setting up this well thought out credit card system using the western model, this undermines every bank in the west, which are empty shells in any case. The banks, just like the US government, are shells held up with debt posing as assets. US treasuries are now debt, not the sterling bonds they once were……..

    If the credit cards of the east are more customer friendly than the west, people from around the world will adopt and use them. Credit cards in the US are consumer abusive, their greed has overcome any interest in benefiting the customers. If Putin’s system is kinder, the banks in the west will lose huge revenues of interest rates……..couldn’t happen to more deserving people than the greedy guts.

    This story is huge.
    Hiding it does nothing to stop it’s advent and growth potential.

  3. Another reason Putin will retain his power, and build upon it. Besides the fact he is a genius, one of the smartest and most astute political figures in the last 200 years, he has his finger on the underlying desires of the Russian people. They know how it feels to be a superpower, and they also know what it is like to be just another country without much power.
    Memory is kind, if it were not, we would all go mad before we turned 30 (assuming we haven’t). The Russian people have forgotten much of the weakness and unpleasant aspects of living in the USSR, they just remember their important status. They don’t remember how difficult it was to buy things……unless you had status in the government, most decent shops were off limits. There were many horrible factors living in the USSR……but it has been a long time, and the younger ones coming up have no memory at all. Those who do are getting older, and dying off………
    This story explains a lot.

    http://rt.com/politics/162256-russia-global-domination-preferences/

  4. Will be interesting to see this develop.

    Europe is already suffering from the retaliatory sanctions introduced over food produce.

    Now the cards are laid out, as Draghi, Barroso & Rumpuy find themselves increasingly embarrassed, the ball will rest not in EU or US hands as winter approaches, but in Russia’s.

    With that knowledge, the Russian banks can insist the acceptance and full implementation of the Union card in EU is a pre-requisite for removing trade barriers.

    I would.

  5. to Squodgy: If that happens, it will weaken US influence even more. If the EU joins Putin’s basket of currencies, and dumps the dollar, it will collapse. The EU is the one remaining united economic power keeping the dollar afloat.
    Like you, I think it is likely the EU will accept their credit card, thanks to food supply pressures and others. Nothing like threats of food shortages to gain agreement, and Putin, like all world leaders, is totally ruthless in gaining what he wants. The acceptance and use of their bank cards will be another sharp cut in the Achilles Heel of the US economy.
    The rates will probably be very attractive, especially in the beginning………bankers are bankers everywhere.

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