UnionPay is the biggest card network in the world, but its business has been concentrated at home — until now:
of its business is concentrated in China, where customers have on average 4.5 cards per person and often pay with a mix of cards and nonbank payment methods.
As threats mount in the Chinese market, looking abroad is the brand's best path to growth. In China, mobile payment apps like Alipay and WeChat Pay, which circumvent card network rails, dominate the country's ecosystem, limiting UnionPay's growth potential and costing the card network valuable fee revenue. Additionally, foreign card networks are pursuing domestic issuing in China, which could bring new players into the market that may threaten UnionPay's dominance.
For potential European customers, this established network removes hurdles to using UnionPay cards. It could also encourage both traditional and nontraditional providers to partner with Tribe and begin issuing UnionPay products, knowing they can amass volume. And working with a startup like Tribe to offer its services removes limits on UnionPay's expansion, allowing it to scale rapidly. By partnering with providers like Tribe, UnionPay can limit its regulatory exposure — the firm doesn't have to pursue a license because cards are issued by third parties, for example — which can help it bypass stumbling blocks faced by other firms and grow quickly.
Additionally, partnering with Tribe gives UnionPay fewer restrictions on the types of issuers it can work with and allows it to cast a wide net: Of the unnamed two providers already interested in UnionPay's services, one provides a virtual card while the other issues traditional debit. Looking broadly for issuing partners could help UnionPay draw audience beyond traditional credit and debit providers and compete in less saturated segments of the market.1.
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