Although not all of the details of the partnership have been made public, what is certain is that the cooperation would have some clear benefits for both parties.
For GlobalCollect, which is part of the Ingenico group, the deal means access to, as mentioned in the press release a few times, 4.5 billion UnionPay cards. For a certain subsegment of the population, this means when they travel, they will be able to directly use their UnionPay card at merchants not only across Asia but globally.
Increasingly though, the largest segment of shoppers that this will affect are China's cross-border ecommerce market. There aren't many reliable figures on cross-border ecommerce, but according to the Chinese government, e-tailing in China hit about US$300 billion in 2013.
Foreign e-commerce sites like Amazon have been frantically working to enable CUP acceptance to take advantage of the huge market growth in this segment. On November 28th, Amazon China launched a two-day overseas shopping campaign covering over 30,000 products with discounts up to 70% to entice buyers.
Ingenico will likely also benefit themselves as an increasing number of Ingenico POS terminals / systems that GlobalCollect uses heavily across their acquiring network both physical and e-commerce, will need to be enabled for CUP acceptance. Afterall, if you're a merchant, why wouldn't you accept UnionPay?
China UnionPay isn't exactly struggling in China, but when you're the dominant payment clearing / network provider with a 100% domestic marketshare, the only way you can go is down and CUP definitely has challenges ahead.
Firstly, the domestic payment card maket is fully saturated - 3x saturated actually, with those 4.5 billion UnionPay cards. While Chinese consumers are gradually spending more, it means your market is a bit limited. Secondly, the regulators look like they are about to make good on their promise to let foreign players into the market. Although unlikely to happen before August 2015, and even less likely to be profitable, Visa, MC, Amex, etc., may start to handle RMB transactions directly.
Finally, UnionPay is also struggling a bit to find its place in the mobile payments space, which is starting to take off in China. Mobile network operators have been driving their Chinese SIM-SWP solution into the market, while China's online and mobile payment providers have focused on QR and barcode payments. UnionPay's online payments business as of Q3-2014 represented only about 12% of the overall online payment market.
With this increased competition at home, China UnionPay is heavily focused on expanding internationally. Based on our internal analysis, we believe that CUP-branded cards issued abroad, will hit 47 million by the end of 2015. Still small, but growing rapidly.