China UnionPay's (CUP) ambitious approach to building partnerships has helped it become the largest payment-card network in the world, according to the author of a recent market report.

“CUP has aggressively forged partnerships with bank card issuers and processors across the globe, and buoyed by network reciprocity agreements, its cards are accepted at more than 37 million merchants, putting its brand acceptance on par with Visa and MasterCard,” David Morris, a consultant who wrote the report for Packaged Facts, told China Daily.

China UnionPay Co has passed competitors such as Visa Inc, MasterCard Inc and American Express Co, the report said.

Packaged Facts, a division of Maryland-based MarketResearch.com, said the global payment-card market generated $17.26 trillion in purchase value in 2014. Payment card purchase volume has grown more than 50 percent since 2011, the report said.

Transactions using CUP cards totaled $5.92 trillion in 2014, equal to 34.3 percent of the market. The company’s share in 2014 was an increase of 40 percent year-over-year, the report released on Tuesday showed.

Visa (27.6 percent), MasterCard (19), Visa Europe (11.2) and American Express (5.9) followed CUP in the ninth edition of Packaged Facts’ Commercial Payment Cards: US and Global Market Trends.

“CUP’s presence is felt most strongly in markets close to home, where it has leveraged burgeoning cross-border travel trends and deepening economic ties to sign agreements with more financial institutions in those countries,” Morris wrote in a Thursday email to China Daily. “But CUP is also gathering more steam in Japan and Australia, as well as the Asia-Pacific region more broadly.”

China’s continued uptake of payment cards should also be buoyed by an expanding middle class, high international travel rates and the government’s push to move China toward a consumption-based economy, the report said.

David Sprinkle, research director for Packaged Facts, said that "China UnionPay has strategically moved abroad, furthering its goal of being 'wherever the Chinese go.’ It has become a global institution that is more aggressively competing with established western networks on their own turf.”

China UnionPay, established in 2002 in Shanghai by the State Council and the People's Bank of China, is the only national bank-card organization approved for use in clearing transactions in China.

In October 2014, China’s State Council announced that it intends to end China UnionPay’s control over bank-card transactions. The move will help open up the country’s bank-card clearing market as part of a greater liberalization of the financial sector.

Foreign firms are now permitted to apply for qualification for bank-card clearing services, according to a post on the central government's microblog. The statement from Beijing did not include a timeframe for the development.

Visa, MasterCard and American Express already face competition from China UnionPay in the Asia-Pacific region, Morris wrote, but a wild card is the degree to which foreign networks can “make a dent in CUP’s home turf”.

“Expect China UnionPay to continue to increase global market share, thanks to continued home court advantage, a significant growth runway left in its home market, and continued movement overseas

“The commercial card market in China remains significantly underdeveloped,” Morris wrote. “To move forward, it requires the expertise players such as MasterCard and Visa can bring to the table. In this regard, the Chinese market strongly benefits from their inclusion in the marketplace. The flip side is that China UnionPay will likely benefit, too, and could subsequently emerge as an even stronger global player.”

jackfreifelder@chinadailyusa.com