In Q3 2015, UnionPay controlled about 1.8% of the mobile payment market by transaction volume through its China Mobile Pay JV and its Merchant Services arm. At the same time, China’s mobile and internet payment markets grew more than 40% from 2014 to 2015, according to data issued by Analysis China research company, Forbes reports.
This led to a USD 23 billion (CNY 150 billion) ‘loss’ in potential transaction fees for China’s banks and UnionPay in 2015 as overall consumer spend continued to shift from traditional card payments where banks are strong, to online payments, where they are weak. This number is projected to increase to USD 61 billion (CNY 400 billion) by 2020.
The challenge is that Alipay and WeChat Pay transactions do not go through banks or across the UnionPay card network. Basically, Alipay and Tenpay (the platform behind WeChat Pay) have their own payment network. As a user pays, money moves from the user’s bank to the user’s account on the Alipay platform, then to the merchant’s account on Alipay and then eventually to the merchants bank.
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