Building a solid house of cards

The banking project that laid the golden egg

It has only been around for a decade, but the birth of UnionPay goes back to the early 1990s and one of the forefathers of modern China.

The bank card was the result of the "Golden Card Project" promoted by Chinese leader Jiang Zemin in 1993. It was established under the approval of the State Council and the People's Bank of China. At its launch in March 2002 UnionPay was hailed as a historic achievement and a major breakthrough in the reform of China's banking.

It is believed that as people's financial habits changed and information technology became popular, the country should have an interconnected bank card network to promote the development of the economy.

By 2001 the initial targets for the "Golden Card Project" had already been achieved and 18 cities across China linked into a central card network with 383 million bank cards issued nationwide.

In 2002 the People's Bank of China asked the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China and the China Construction Bank to introduce bank-card networks in 300 cities.

UnionPay was born and introduced as a trial in 40 cities across China.

It was seen as a significant milestone in China's banking industry following its entry into the World Trade Organization and successful bid for the 2008 Olympic Games a year earlier.

At UnionPay's opening ceremony in 2002, Dai Xianglong, then governor of the People's Bank of China, spoke of the historic development for China and hinted at the international opportunities it presented.

"In the past, we have gained support from international bankcard companies in the development of bank card businesses in China. The Chinese bank-card business boasts the most extensive market," he said.

"From now on, we would like to cooperate more broadly and deeply with international bank card companies and large commercial banks so as to speed up bankcard business development in China."

He closed the opening ceremony offering a maxim for the future of UnionPay: "One card, easy travel across the country."

Just 10 years on, the "one card" can now be easily used while traveling to 141 countries.

In June 2007 Egypt became the first country in Africa to have its ATMs and merchants accept UnionPay. In December 2008, FNB in South Africa agreed to the use of the card at points of sale across the country.

UnionPay is now accepted in 40 countries and regions in Africa, with that number set to increase. Cardholders can use it to withdraw cash and buy products. South Africa, Mauritius and Egypt made up the bulk of transactions in 2011, according to figures released by UnionPay.

A Euromonitor forecast for 2010-2015 predicted the annual growth of card numbers in this region would be 11.7 percent, among the fastest-growing regions in the world.

UnionPay, which has about 400 domestic and overseas associate members, is actively targeting the market in Africa with the aim that all banks and payment institutions adopt the card into daily transactions for tourists and businesses.

leehannon@chinadaily.com.cn

(China Daily 02/08/2013 page17)