“What the MOU means is that there is a partnership arrangement we've established with China's UnionPay,” Brad Gillis, Chief Executive Officer of Regulated Services at BankservAfrica told CNBC Africa on Monday.
The South African based bankcard transaction processer, BankservAfrica, will facilitate payment services such as bankcard acceptance and issuance for the Chinese based bankcard association, UnionPay for the South African market as well as other African regions.
“The idea is that it will give the banks and therefore the consumer, the option of the alternative card as opposed to the more traditional cards which are currently issued in this economy. At this stage it’s their international cards that we want to help facilitate on the processing side,” explained Gillis.
China is currently South Africa’s largest trading partner and relations between the two countries have expanded tremendously in recent years, resulting in a high demand for cross border payments.
According to reports, UnionPay therefore have attended to this demand and are proactively facilitating and deepening cooperation with financial institutions in South Africa as well as other African countries.
Union cards were introduced in South Africa in 2008 and have witnessed a rapid growth in transaction volumes. The card has also since been widely accepted in over 40 African countries.
BankservAfrica, on the other hand, has connectivity to all banks in South Africa as well as some other African countries, allowing them to create one portal for any UnionPay transactions to occur between banks and merchants.
“It’s a lot more efficient to come to one portal than to have multiple portals in to the UnionPay switching environment,” said Gillies.
BankservAfrica also has a network covering all the Automated Teller Machines and merchant point of sale (POS) terminals in South Africa.
“We are now a one stop shop for banks who want to connect to UnionPay. They no longer have to connect directly to Hong Kong and can rather connect through us. We can give them the efficiencies and benefit of transacting in a tried and tested environment,” said Gilliis.
Currently, the partnership’s focus will be on the Southern African Development Community (SADC), and will expand into other regions from there.
“Our particular focus is on SADC. There is a payments integration project being launched by the central bank governors and this is just another piece of a really positive puzzle where you can take a variety of card payments into the region. That is the SADC initiative,” he explained.
“This type of partnership means that we can take it to the next level and not just have card but other payment channels available to an emerging market that is probably going to leap frog the traditional payments that we've had in place.”
With UnionPay’s increasing popularity, the card will be offered not only to retail merchants, but to anyone that needs to get a payment from China through UnionPay. It will also be offered for local payment transactions as well as expand into the corporate market.
This partnership, according to UnionPay, will deepen exchanges and cooperation between China and Africa.