The news:After a yearlong beta, China-based card networkUnionPayandStripedeepened their partnership so Stripe sellers can accept payments from UnionPay cardholders, including in Chinese currency. They can also automate returns and disputes and manage these payments through their existing Stripe dashboard.
Some key context:Both firms have been broadening their partnerships and hunting for expansion this year.
- Stripebroughtits issuing business toEurope, launched in theUnited Arab Emirates, and partnered with major players likeGoFundMeandAtlassianto extend its reach.
- UnionPaystrucka deal with buy now, pay later (BNPL) giantSplititand tied up with major platforms like Russian marketplaceOzon.
Stripe’s opportunity:Fully enabling UnionPay acceptance helps expose Stripe’s sellers to a massive potential base with an appetite to spend.
- In 2019, UnionPay was the largest card network worldwide: It counted8.4 billion branded cards worldwide,up from6.69 billionin 2017,perThe Nilson Report—nearly all of which are in China. Likewise, the network’stransactions grew 15.2% annually to151 million, giving it a32% share of the marketand placing itsecond to Visa.
- Eighty-seven percentof respondents in Chinasurveyedby iResearch made an overseas online purchase at least once a month, indicating there’s robust interest in cross-border shopping in the market.And Chinese consumers spent$100 billion on ecommerce goods and services outside of Chinalast year, perFinextra.
Now that Stripe sellers can easily accept UnionPay and yuan-based transactions, they can capture some of this volume and boost sales—ultimately growing Stripe’s overall volume. And it might attract new clients to the platform that want easier access to China-based commerce at a time when many businesses—and small businesses in particular—arelookingfor new payment providers.
UnionPay’s long-term plans:UnionPay’s international ambitions could see a slight lift from this strategy.
UnionPay’s acceptance network abroad is strong: Earlier this year, the networkannouncedthatas many as 55 million merchants in 180 countries and regions now accept UnionPay cards. These gains come from major partnerships with terminal providers and acquirers globally: For example, in early 2020, UnionPay andPayPalinked a partnership similar to Stripe’s deal.
But the brand’s issuing business outside of China remains small relative to both its business at home and competitors worldwide as it angles for international reach. Broadening its acceptance network might be a way to attract further interest from partners abroad and could crack the door open for a larger global gain.
