Visa And MasterCard Remain Top Dogs in Global Acceptance, But China Is Rising Fast

Just as Visa Inc. prepares to swallow up the 38-country Visa Europe system, at least one market researcher has released a report expressing some doubt about how long Visa and its bank card rival, MasterCard Inc., will be able to maintain their share of card-accepting merchants around the world.

On the whole, the news about global acquiring is good, especially for U.S.-based merchant processors that have set up foreign operations in recent years. The count of merchant locations accepting cards is expected to double over the next six years, from 46.6 million at the end of 2014 to 90.3 million by the close of 2020, reports U.K.-based researcher Retail Banking Research Ltd., thanks to fast growth in the Asia-Pacific region.

Visa and MasterCard currently account for a 78% share of these stores. But RBR isn’t so sure that share can be sustained. “It is unclear whether they will able to maintain this level, as most of the growth will be in China, where they are only accepted at 29% of outlets,” RBR notes in a release about its report, “Global Payment Cards Data And Forecasts to 2020.”

Indeed, China’s UnionPay network is outstripping all other card systems in terms of growth in acceptance locations. Its count increased 25% last year, with 5.7 million additional locations. Its total of 28 million ranks it fourth in the world, behind Visa and MasterCard (37 million each), Discover (36 million), and Japan’s JCB (30 million).

Discover’s total, which includes its Diners Club locations, means the U.S. network has just about fulfilled its ambition to catch up with Visa and MasterCard. But much of its growth is attributable to acceptance deals with UnionPay and JCB, RBR notes. “Discover’s acceptance network outside of China is significantly smaller than that of Visa and MasterCard,” the RBR release says. As for UnionPay, its expansion still comes largely from its home market, with 4.4 million new locations in China.

Driving growth overall are strong card adoption rates among merchants in the Asia-Pacific region along with the penetration of contactless and mobile point-of-sale programs worldwide, RBR says.

The Asia-Pacific region’s merchant count increased 17% in 2014, and it now accounts for 42% of all card-accepting outlets, more than any other region and well ahead of No. 2 North America at 22%, according to RBR figures. Despite this large share, the firm forecasts growth will “remain strong” in the Asia-Pacific region at least through 2020, with strong potential in China and India.

Contactless terminals have tended to replace traditional mag-stripe devices in many markets because of the introduction over the past decade of the EMV chip card standard. EMV terminals usually come equipped for near-field communication (NFC), a contactless protocol. But many merchants around the world that sell low-value goods or services are adopting terminals for the first time because the contactless capability allows them to accept cards and speed up service, RBR reports.

“As a result, contactless card acceptance is becoming more common in outlets such as pharmacies, cinemas, restaurants, and coffee shops,” the firm says in its release.

At the same time, mobile POS devices are “likely to play a key role in increasing card acceptance, particularly in merchant sectors where traditional card acceptance may not be cost-effective,” RBR says.

Overall, the research firm strikes an optimistic note about worldwide acquiring. “The recent expansion in card acceptance worldwide shows no sign of stopping,” the release says, though it cautions that in more developed markets growth “will have to come from [mobile POS].”