Visa ready for China market opening(2)

"As the Chinese market opens to us, I believe we could have the opportunity to bring such products here, and provide more diversified options to consumers."

Liao said Visa's expertise in online transaction security could also be used in China, such as on verification and providing security solution for online traders.

In 2010, Visa bought CyberSource Corporation, a leading provider of electronic payment, risk management, and payment security solutions that is currently registered in Shanghai.

Mary Chong, a partner at KPMG Advisory (China) Ltd, said various major foreign players are preparing to enter the Chinese market, cautiously at first, but they are likely to thrive once the market is fully opened.

"China may let them participate, but I don't think they will let them play a key role in the market," she said.

She added that China has to accept that it cannot control its domestic and non-foreign currency clearing business any more, especially if it hopes to continue growing Shanghai as a global financial center.

"I think they (foreign companies like Visa and MasterCard) can do credit card clearing."

A senior executive at the Payment & Clearing Association of China, who declined to be named, said that China will probably open its credit card payment market to foreign players, but it's hard to imagine such companies operating interbank clearing networks.

"Giants such as Visa and MasterCard have more experience and strength than UnionPay, and if they created a monopoly in any particular area, China's financial security would be in jeopardy," the source added.

But Liao said that China has opened its market to foreign banks, which hold more transaction and individual cardholder information than Visa, so it would be groundless to keep foreign players out of the market due to financial security fears.

As foreign players such as Visa eye the Chinese market, its biggest opponent UnionPay has been extending its global footprint to more than 140 countries and regions.

Xu Luode, UnionPay's president, said that 95 percent of debit cards issued by UnionPay in China are single-branded, while half of its credit cards are co-branded with international players such as Visa and MasterCard, a figure which the company will try to lower in the coming years as its own overseas presence improves.

In November 2012, UnionPay International Co Ltd was launched in Shanghai to increase its global expansion.

Transactions at merchants using cards carrying the American Express, Diners Club, JCB, Mastercard, Unionpay, and Visa brands totaled nearly 149.4 billion in 2012, a rise of 9.7 percent on 2011, according to the Nilson Report, a source of global news and analysis covering the credit, debit and prepaid card industries, published in March.

Visa debit cards continued to account for most transactions at merchants, with a share of 39.3 percent, followed by Visa credit cards with nearly 22.8 percent.

UnionPay credit card contributed to 3.17 percent of global transactions at merchants, while transactions made through its debit cards accounted for 2.86 percent.

The report added that while UnionPay had the highest percentage increase in purchase transactions (up 40.5 percent), it only added 2.6 billion transactions compared to an increase of 5.04 billion for Visa and 4.92 billion for MasterCard.

UnionPay ranked fifth globally in terms of global acceptance locations, the Nilson Report said, while Visa and Mastercard topped the list with 35.9 billion locations worldwide.

"I believe that UnionPay will become a global force, as a lot of Chinese are going overseas. This is natural. It's just a matter of time," Chong at KPMG said.