Abra Cadabra. After a long decade of waiting, Mastercard has pierced the Great Wall of China. It is an opening loaded with symbolism, after years of dialectical confrontation between Beijing and Washington. And not by chance, it comes after the recent meeting between Joe Biden and Xi Jinping in San Francisco.
Hours later, the Chinese president enjoyed a standing ovation from the finest in Silicon Valley – and American industry and finance – at a dinner for two thousand dollars a cover.
As soon as he returned to Beijing, a week ago, Xi gave the green light to the demolition of the wall that stood in front of American credit cards, hegemonic in most of the world but irrelevant in China. Only the most exclusive, American Express, opened its doors in 2020, in a 50/50 business alliance.
For Visa and Mastercard the doors were still ajar, even though they had been accepted in high-end establishments a year before. From now on, tens of millions of Chinese terminals will accept the latter.
It should be said that China is opening from a position of strength, when its payment tools have spread to the majority of the population, with WeChat Pay and Alipay boasting more than one billion users.
Plastic money had to eat paper money, but the truth is that China – like Japan – has gone almost directly from paying in cash to preferring payment by telephone. 38.3% of purchases in China are made with mobile phones, double that of the US.
Four months ago there was already a thaw, when the aforementioned WeChat Pay (Weixin in Chinese) and Alipay (Zhifubo in Chinese) launched an app so that foreigners could enjoy their electronic wallet in yuan, even without having a Chinese checking account.
Iván, a Catalan living in Canton, confessed this Friday to having paid for his last purchase, “some tomatoes in the market”, with his cell phone. “On WeChat. Although I like to pay in cash more than them, it is increasingly common that they do not have change.”
The most recent opening is a relief for Mastercard, although at this point its potential market is mostly expatriates and tourists.
Back in 2012, the WTO ruled in favor of the US due to the discrimination exercised by China against Mastercard and Visa. The latter is still out of play for the moment, although its cards allow you to withdraw money from the ATM.
It should be said that Mastercard’s entry occurs through a business alliance of 139 million dollars, 51%/49%, with the Chinese NUCC, preliminarily approved three years ago.
Needless to say, Alipay is part of Alibaba, the “Chinese Amazon” founded by Jack Ma. While WeChat Pay is an extension of WeChat, “the Chinese Whatsapp”.
“China wants to be a partner and friend of the US,” Xi Jinping proclaimed in San Francisco, before Tim Cook (Apple), Elon Musk (Tesla) and Albert Bourla (Pfizer). In a reversal of roles, the Chinese president broke a spear “for a prosperous, open and self-confident America.” Upon his return to Beijing, he had to set an example, also at a time of lower flow of investment and tourism.
Finally, it should be noted that UnionPay, the system under which the cards of 170 Chinese banks operate, last year added a transaction volume greater than that of Visa worldwide. 40% of the global total, compared to 38.7%.
In fact, the number of cards with the UnionPay symbol is already greater than Visa and Mastercard combined. Their operations – debit in 75% of cases – are still carried out overwhelmingly within China. But it is already broadcast in 70 countries, accepted to a greater or lesser degree in 180 and competes with tailwinds in many emerging markets, from Burma to the Congo.
