City Bank becomes the third local lender to issue China’s UnionPay card

City Bank has rolled out UnionPay debit cards, joining a growing list of lenders in Bangladesh offering cards of the world's biggest card issuer.

Founded in 2002 under a charter from the People's Bank of China, UnionPay has a virtual monopoly on domestic bank card payments, where it has issued more cards than Visa and Mastercard combined.

In recent years, the Chinese group has been expanding internationally, mainly in Asia, hoping to grab a slice of the pie mostly controlled by MasterCard and Visa.

In Bangladesh, Eastern Bank and Mutual Trust Bank already issues the card of the Chinese state-controlled giant, whose cards are accepted at more than 28 million merchants and upwards of 1.7 million ATMs across 179 countries.

This is the second announcement City has made this month on its thriving card business, as it looks to consolidate its position as the market leader in the cashless payment segment.

Earlier this month, the bank rolled out a dual-currency debit card, joining a growing list of lenders that are offering the facility to lure in the progressively global-minded customers in the country that are averse to using credit cards.

The card business has gained momentum since July with the gradual resumption of economic activities, according to Mashrur Arefin, managing director of City Bank.

Card payments around the world plummeted as most countries banned air travel in early March to prevent the spread of coronavirus. In Bangladesh, economic activities came to a near halt from late March to June during a government-enforced shutdown.

During that time, all banks witnessed a nosedive in credit cards payments for travel, tourism and lifestyle products. As the market leader with a 35 per cent share of the credit cards in circulation, City Bank took a big hit.

Between March and April, local transactions of City Bank's credit card fell 41 per cent compared with the previous two months. Foreign transactions plunged 86 per cent and transactions at point of sale (POS) terminals 50 per cent.

But with the partial reopening since July, payments with the bank's cards had started accelerating and now it has almost reached the previous figures.

For instance, in January Tk 487 crore was paid at City Bank's POS terminals, a tool it leads in usage with a 46 per cent market share.

It plunged to only Tk 137 crore in April. But it has seen a sharp recovery in July to reach Tk 522 crore.

"Bangladesh is a booming economy and people are now starting to make purchases. So in overall card business is coming back on track including credit card purchases," Arefin told The Daily Star.

Subsequently, the bank felt now was the right time to introduce the UnionPay card to complement its cards from the other global payment brands such as American Express, VISA and Mastercard.

The China UnionPay debit cards can be used at National Payment Switch Bangladesh-connected ATM networks of others banks apart from the 32,000-odd City Bank point of sale (POS) terminals around the country and about 300 cash points.

"The new debit card will be delivered to customers on being printed on the spot at the branch," Arefin said, adding that the bank will soon introduce China UnionPay credit cards.

The UnionPay debit cardholders will enjoy all the usual benefits of a debit card along with various savings offers and buy-one-get-one-free offers at popular restaurants.

City Bank's foray into the card segment began in 2004 through the VISA payment network, offering a variety of debit and credit cards.

Since then, the bank and the cards industry as a whole have made great strides in reshaping the payment landscape.

City Bank began its prolific partnership with American Express back in 2009, launching with American Express Gold and GreenBlue credit cards, followed by the first account card in the country, CityMaxX card in 2012.

In 2011, City Bank partnered with Mastercard to launch debit and prepaid cards.

Subsequently, the American Express Platinum credit card was launched to cater to the affluent segment of society.

In 2019, City's overall card bill business stood at Tk 10,176 crore, with credit cards alone accounting for Tk 3,800 crore.

In the first seven months of the year, the figure totalled Tk 5,257 crore, of which credit cards contributed Tk 1,880 crore.

"So we can say that in overall card transactions are not going bad. Hopefully, it will continue to grow faster," Arefin said.

As of now, the bank has issued 12.9 lakh cards, some 4.5 lakh of which are credit cards. Last year alone it issued 60,000 credit cards.

"Credit card payments have gained momentum since July. While this is a piece of good news, we are cautious because we are still unclear whether clients can pay the card bills on time," Arefin added.