The online payment unit of JD.com became a member of China UnionPay on Wednesday, extending the bank-card operator's network to all major third-party payment platforms in China with the notable exception of Alipay.
Chinabank Payments Technology Co. Ltd. will be able to accept both online and offline transactions made with a bank card operated by UnionPay, according to a strategic agreement signed by UnionPay and JD Finance, the financial arm of Chinese e-commerce giant JD.com.
The agreement also allows UnionPay and JD Finance to develop new payment products, expand financial services in rural areas, and explore cooperation opportunities in big data and overseas business that tap into UnionPay's global network.
So far, more than 120 third-party payment companies that can connect and switch between different banking systems have joined the UnionPay settlement network, including Tenpay, which was set up by Tencent Holdings Ltd., and 99Bill, controlled by real estate conglomerate Wanda Group.
But the long list of UnionPay members does not include Alipay, which was launched by Alibaba Group Holding Ltd. in 2004 and accounts for more than 50% of China's online payments market.
Sources from Ant Financial Services Group, the Alibaba unit that operates Alipay, said that discussions began with UnionPay some time ago, and that while no concrete progress has yet been achieved, future collaboration has not been ruled out.
While bank-card associations such as Visa and UnionPay operate switches and connections for interbank transaction settlements overseas, the booming online payment companies in China directly dock with banks, enabling them to get around bank-card associations.
Analysts said this business model not only harms the interests of bank-card operators, but also creates difficulties for regulators, making it harder for them to monitor the transfer of funds held in online accounts.
The online payment unit of JD.com became a member of China UnionPay on Wednesday, extending the bank-card operator's network to all major third-party payment platforms in China with the notable exception of Alipay.
