In just 15 years, Chinese financial services firm UnionPay has grown into an international giant, overtaking Visa and Mastercard as the world’s largest payment cards platform by total credit and debit cards issued. The Post’s Kali Kotoski spoke with Vincent Ling, deputy general manager of UnionPay International Southeast Asia, about the company’s performance in Cambodia, where cash remains king.
How long has UnionPay been operating outside of China and in Cambodia?
The company started fully internationalising its business in 2012. At that point we separated from China UnionPay to set up a dedicated company for international expansion. The idea was to grow our business regionally and globally. In Cambodia, we started with a presence in 2008 but it was not until 2014 that we issued our first card. Since then, we have grown and now have 12 banking partners that either issue UnionPay cards or help us to sign on merchant clients for transactions.
How well is UnionPay represented across locations in Cambodia?
We are pretty well covered compared to our competitors, but we don’t really view the other companies as being in direct competition because cash still remains the biggest obstacle. We all have the view that we are looking at how we can make payments frictionless, more convenient and safer. As a payment industry, we are trying to remove the risks associated with cash.
How has UnionPay worked to build brand recognition against more entrenched companies such as Visa and Mastercard?
There are a couple things that we have done very well. If we take a step back to look at why we entered Cambodia, tourism and textiles are major parts of the economy and there are a lot of the Chinese, Koreans and people from Hong Kong visiting Cambodia on holiday or for business. So we initially thought that these travellers needed a way in Cambodia to shop, pay for hotels and eat at the best restaurants. And with large currency conversions potentially being an issue for travellers, we quickly expanded our acceptance network. Once this was set up we then started issuing operations, which have steadily grown.
How challenging is it to grow in a developing country like Cambodia where so few people use credit cards?
Well, I would look at the challenges from a different perspective. You have to look at the banked population of a country. For example, Singapore is close to 99 percent banked for adults, so it is easy to enter the market. And Malaysia is around 50 to 60 percent, with Cambodia somewhere around less than 20 percent. So based on the banked population statistics the tactics for growth kind of change, but the overall strategic mission is the same. The difference comes in how we issue cards in Cambodia and what products we offer.
So what products does UnionPay offer in Cambodia?
We offer a traditional credit card as well as a debit card that links directly to a bank account. In other words, from a consumer perspective, the debit card doesn’t act like a typical credit card where you make payments at the end of the month. Instead, it takes the funds out of your account within 24 hours of the transaction, while the merchants are paid automatically.
What other products are you considering offering in Cambodia?
We see no reason why we could not push forward with prepay cards for the unbanked population that may not have the qualifications to open a real bank account. Essentially, the prepay card functions pretty much like a debit card. The only difference is that the money is sitting with the prepay platform and not in a bank account. That is a very cost-effective way of getting online, and getting into the electronic payment world.
What is your expectation for future credit card use in Cambodia?
I would say we remain very positive for the market in Cambodia. From our standpoint, we still need to expand our issuing business by partnering with more banks here. I would say that our traction in Cambodia is very healthy and we intend to expand further as more people become banked.
This interview has been edited for length and clarity.