A MasterCard executive confirmed with Reuters yesterday (Nov. 16) that the global payment operator has observed double-digit annual growth in credit card transaction volumes in China.
As the second-largest economy, China’s strong eCommerce industry was a driving force behind the growth, the executive said.
During an interview at the Asia-Pacific Economic Cooperation summit, MasterCard’s Co-President for Asia/Pacific Ling Hai told Reuters that China’s decision to welcome foreign payment card providers like MasterCard is a “game changer.”
While the country’s domestic transactions continue to be dominated by Chinese payment network UnionPay, Ling Hai said that foreign companies may see that change as time goes on.
“That’s going to change with China opening up. We will be able to process domestic transactions just like a domestic national player,” he explained, noting that the exact timeline was still unknown.
Following a World Trade Organization ruling in 2012, China was forced to break the monopoly held by state-controlled UnionPay by introducing new rules for foreign payment networks, which came into play as of June 1.
This move opens the door for companies like Visa and MasterCard to finally have an opportunity to break into a market that Bloomberg previously estimated handled nearly $73 trillion in 2014.
According to Reuters, MasterCard’s current business in the country mainly consists of processing cross-border transactions for international travelers visiting China or for Chinese cardholders who travel overseas.
“Realistically, Visa and MasterCard are not going to be the dominant card networks in China in the near future,” said Tristan Hugo-Webb, associate director of global payments at Mercator Advisory, to Financial Times earlier this year.
“Nonetheless, even a small share of the fast-growing Chinese electronic payment market will be a big boon for Visa and MasterCard as they increasingly face competition from other players in the global payments marketplace.”
As Ling Hai explained, foreign companies have to truly gain full access and get the market right in order to reap the benefits it can bring.
“China is the future in terms of consumer market. It will contribute a great deal in terms of spending and volume,” he added.
Ling Hai confirmed that MasterCard has already processed “millions” of cross-border transactions for Alibaba and Tenpay since it began doing business in the China.