The world's largest payment card issuer, China UnionPay, is reportedly planning to enter the European market in a move that could cause serious competition for Visa and Mastercard.
According to the Financial Times, the Chinese payments provider is planning to issue branded cards in the UK in October followed by similar moves in other European markets in December.
While UnionPay has held a near monopoly on bank card payments in China, it is coming under increased competition for electronic and mobile payments in its domestic market from TenCent's WeChatpay and Ant Financial's Alipay.
Meanwhile Visa and Mastercard have long been frustrated in their efforts to enter the Chinese market. Both are currently awaiting approval from Chinese authorities for licences to clear renminbi payments. Now they face a new rival in one of their key markets.
It is not the first time that UnionPay has been present in ther UK or Europe. In 2011 it opened an ATM terminal in Harrods department store in London whereby Chinese tourists could pay for goods directly from their domestic bank accounts.
Now the payments provider, whose cards are accepted by more than 41 million merchants and 2 million ATMS in 71 countries, is looking to expand its customer base beyond its domestic market.
UnionPay is initially planning to issue virtual pre-paid cards to corporate clients to issue to their staff travelling to Asia. The cards will be accessible via a digital wallet and produced in collaboration with a UK company. It then intends to expand both the scope and reach of its service, targetting local customers in domestic markets across Europe.
According to UnionPay it does not have to apply for a licence for its European venture as the cards wil be issued by third party banks and the payments will be processed also by a third party.
To date, UnionPay's global expansion plans have focused on other Asian countries such as Japan and Myanmar, although it does already have offices in six European locations with another due to open shortly in Stockholm.