UnionPay embraces chip-based cards

“Thailand has opened up a good opportunity for us. We see the next couple years as exciting for UPI,” Wenhui Yang, general manager of UPI Southeast Asia, told a press briefing yesterday.
“We have doubled the budget for marketing and branding for this year compared [with] five years ago to keep up our double-digit growth in Thailand and the region.”
UPI entered Thailand in 2005 and started issuing cards here in 2009 by launching a credit card with Bangkok Bank.
To comply with the rules under the government’s national e-payment programme, all new debit cards in Thailand will have microchips instead of magnetic stripes.
UPI is not a stranger to the Thai market, Yang said. It has been growing in this region and in Thailand. In Thailand, UPI has been active in the market building infrastructure.
TPN (Thai Payment Network) is the example. UPI holds 50 per cent of TPN and Bangkok Bank the rest.
TPN is the first local-card network for processing electronic payments, in support of the Bank of Thailand’s policy that all payments by domestically issued debit cards must be processed locally.
Last month, UPI and Bangkok Bank issued the first TPN chip debit card.
Commercial banks are planning to issue their own TPN debit cards since the fee for merchants accepting TPN cards is less than 1 per cent, compared with the 1.5 per cent normally charged by international card networks.
 “We are moving not only from the acquiring business but moving more towards issuing cards locally,” Yang said.
UPI has strategic local card-issuing partners including the latest two – Kiatnakin Bank and Land and Houses Bank.
During the past decade, UPI has focused on the merchant acquisition business – persuading merchants to accept UPI cards from local and outbound customers, the latter mostly Chinese tourists.
As of last month, UnionPay cards enjoyed almost 90-per-cent merchant coverage in Thailand.
UnionPay’s policy is not to disclose the number of its cards in Thailand, but there are more debit cards than credit cards.
“We run different strategies for credit cards and debit cards. Debit cards are affordable for payment for everyone. But growing [the credit-card business] might take quite a long time,” he said.
In the region, UPI has issued 9 million debit and credit cards.
Globally, 5.4 billion plastic cards are in circulation.
Southeast Asia is a promising market for UPI because it can expand quickly by adding new merchants that accept the firm’s cards.