Not only Visa and Mastercard: what other payment systems are there and how they work

VC tells what payment systems are used in the world besides Visa and Mastercard, how they differ and how they work.

In Russia there is MIR, in China there is UnionPay, and Mastercard and Visa are almost everywhere. What other popular payment systems exist?

Payment systems there are a lot of them in the world. Almost every country has its own.

The article discusses the largest and most popular payment systems. They have a lot of holders kart and significant transaction volumes, and they are also accepted at many retail outlets.

Experts spoke about the most unusual, colorful and interesting samples.

International giant and global titan

What brands do most people associate with the phrase “payment system”?

That's right, with Visa and Mastercard.

Background:

• Visa is a little larger, Mastercard is a little smaller;
• It is believed that Visa is somewhat stronger in America and Asia, and Mastercard in Europe, but this is a myth - they are about the same.
• Visa created Bank of America in 1958, and after some time began to provide access to other banks. Mastercard was launched in 1966 by an association of several large American banks.

So what is the difference?

Of course, they are not completely identical. They have slight differences in pricing for banks, in chargebacks policies, or in corporate structure and approaches to business organization. But these are all nuances that are of interest only to professionals from the payments industry.

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However, competition in markets and the fight for consumers has not been canceled. This means that differences should be in individual functions and benefits for the client, as well as in marketing.

The advantages include the following:

Loyalty programs. Both systems have their own loyalty programs with their own unique partners in different countries (this is in addition to the loyalty program of the bank that issued the card). Mastercard has its own business lounges at many airports around the world. Premium card holders are allowed into them.

Innovation. Mastercard is actively moving towards crypto by buying up startups and issuing special crypto cards. Or it improves personal offers in stores and restaurants. Visa is also not sitting idly by – it issues payment rings and buys startups for seamless data exchange with marketplaces, including crypto. However, Visa and Mastercard are equally active in innovation, but the specifics may differ.

Other big Americans, but with an important difference

American Express. Founded back in 1850. At first it was a transport company issuing traveler's checks, and it issued the first payment card in 1958. Now it is one of the largest payment systems, whose cards are accepted in 140+ countries around the world.

Discover. In the early 1980s, the large American supermarket chain Sears decided that people weren't buying enough and it would be a good idea to give them credit cards. As a result, they launched their own credit card – Discover Card. The project was not very successful at first, but over the next couple of decades, Discover bought several payment players (for example, the interbank payment network Pulse in 2005 or the Diners Club payment system in 2008), and also entered into partnerships with many banks. And eventually it turned into a full-fledged payment system, with its own bank, card issue, etc.

AmEx and Discover have one important difference from Visa and Mastercard.

The latter are engaged in making payments through their payment engine, but do not know how to issue payment cards themselves. And they do not interact with the end cardholders (i.e. us). You cannot go to a Visa or Mastercard office and issue a card directly. You will have to do this through some third party - a bank, fintech, chain of stores or airline (depending on which card we are talking about). But AmEx and Discover can issue cards on their own.

That is, they are payment systems and financial institutions (banks) rolled into one.

By the way, Diners Club, which was absorbed by Discover, can be called the oldest payment system in the world. It released its first card in 1950. In general, this company is quite interesting.

In 1949, the director of a credit company, Frank McNamara, after eating at his favorite restaurant, discovered that he had forgotten his wallet with money. And then an idea came to his mind: it would be great if restaurants issued special cards to their regular customers, which would record the visitor’s debt to the establishment. And the company that issues these cards would become the guarantor for this debt to the restaurant.

Payment, system, card, blow!

Quite recently, a significant event occurred in the global payment industry - the Chinese UnionPay overtook Visa in terms of the volume of processed transactions, becoming the new global leader.

UnionPay was founded in 2002 by decision of the State Council of the People's Republic of China and the People's Bank of China. No American mergers and acquisitions for you - just a firm and clear decision of the party!

UnionPay is now accepted in 170+ countries, including the USA and Western Europe. However, not everywhere - the likelihood of having problems when paying with a Chinese card in Western online stores is especially high.

The card is connected to Apple Pay and Google Pay only in China (apparently, the local regulator pushed Apple and Google). In the rest of the world it only works with Huawei Pay on devices of the same name.

UnionPay actively uses co-bagging.

Cobage is when a card is issued by two payment systems at once, that is, these are two full-fledged cards on one piece of plastic.

In 2015, UnionPay was already becoming a global leader in terms of the volume of payments processed. But then 99,5% of these payments were inside China. In addition, UnionPay was still serving as the main means of payment in China at that time, and the positions of QR payments through WeChat or Alipay were relatively modest. Now it’s a completely different situation. QR payments dominate in China. There is a very high probability that when you try to pay at a street corner using UnionPay, you will run into the surprised face of Uncle Liao, who, instead of an acquiring terminal, will hand you a cardboard with a QR code. But UnionPay is actively expanding outside of China - primarily in the countries of Southeast and Central Asia (but not only).

If in 2015 UnionPay’s global leadership was determined exclusively by the domestic Chinese market, now the Chinese system is a full-fledged global player. What will happen next given the likely increase in tension between China and the West is a big question.

Cards of deadpan samurai and anime heroes

If a couple of years ago you paid attention to the store window where the logos of accepted cards were indicated, then among them you probably noticed strange 3 letters - JCB.

So, this is the Japanese payment system Japan Credit Bureau. It is third in the world in terms of the number of card acceptance points. It was founded back in 1961, i.e. even before Mastercard.

It is accepted in many countries.

An interesting feature of JCB is direct conversion through both the Japanese yen and the Chinese yuan. Conversion currency is the monetary unit through which the payment system recalculates the payment from your currency to the seller’s currency. Therefore, JCB cards are very popular among entrepreneurs doing business with both Japan and China (they can save money through direct conversion). And also among travelers to Asian countries - in this region JCB has a lot of partners as part of their loyalty program.

Russian MIR

After its launch in 2014 and until the “great exodus” of Western companies from the Russian Federation, MIR was a purely local history and a map for state employees, pensioners and individual enthusiasts.

However, even then MIR was able to competently promote itself within individual client segments. For example, a campaign for football fans worked quite well - MIR awarded increased cashback on the days of matches of the Russian national team (for goods at the stadium and various attributes relevant to fans).

And already in 2018, MIR launched a full-fledged loyalty program with a wide range of partners - just like a real adult payment system.

Indian patriotic cards

In 2012, India launched its own payment system RuPay (“Ru” - “rupees”).

To support the new payment system, the Indian authorities resorted to protectionism: for example, they obliged all companies with revenues of more than $6 billion to accept RuPay cards, regardless of their wishes. And Indian Prime Minister Narendra Modi periodically emphasizes in his speeches that “payment with RuPay cards is a service to the nation and country, available to everyone.”

In addition, India came up with another way to promote RuPay - they launched the UPI payment service. This is a unified payment interface for online payments and transfers, which any company can easily connect to via API. So Indians see the same form of payment everywhere and definitely won’t get confused. In addition, UPI can store card details ensuring a completely seamless experience. Western payment systems also want to join the scheme, but they are not allowed in yet.

RuPay currently accounts for approximately 60% of all cards issued in India, but only 34% of transactions by number and 30% by volume, which hints at RuPay's popularity among, well, the common people.

RuPay cards are accepted in many countries, including the USA and Europe, but they are, of course, especially popular in Asia.

What's in Uzbekistan?

Sunny Uzbekistan has two of its own payment systems. The most popular among them is Uzcard; almost all residents have its cards. Uzcard was launched in 2004 with significant state participation, but relatively recently the state share of 75% was privatized.

Humo was created in 2018 and is fully owned by the Uzbek Central Bank.

Humo is quite different from Uzcard. Firstly, it strongly emphasizes the independence of banks. The bank itself chooses the acquiring terminal, configurations and features of the card, and Humo only conducts interbank clearing and is responsible for security and reliability. However, Humo's reliability is so-so - users say that the system often freezes and turns off, Uzcard is better with this.

Secondly, until recently there were free transfers between two Humo cards from different banks, but this function was recently removed.

Cards of both systems are accepted everywhere in Uzbekistan, but when trying to pay with Visa/MC, some sellers may make a surprised face.

Both systems are not used outside the country, but Uzcard is actively developing co-branded cards: for example, there is Uzcard+UnionPay, and previously there was Uzcard+MIR.

You can also transfer money directly from Russian non-sanctioned banks to both cards.

It does not work with all Uzbek banks, but with many.

Mysterious Iranian payments

There are no Mastercard or Visa in Iran and never have been.

In 2002, the Iranians decided to make their own nationwide payment system called Shetab. At that time, Iran became the 4th country in the world with its own system - after the USA, Japan and China. With the advent of Shetab, Iran has integrated with some countries in the East, such as the UAE, Kuwait Bahrain and Qatar, as well as some Chinese banks, but there are nuances and restrictions.

Shetab has one interesting feature. It is no secret that Iran is a deeply Islamic country. And in Islam credit is not highly respected. According to the canons of Islamic banking, loans and other transactions with interest are called “riba” and are recognized as haram (sin).

Indeed, the vast majority of Shetab cards are debit. But not all. There are still credit cards. Or rather, they are not entirely credit. These cards use a special Islamic transaction called “murabaha”.

It works like this.

When paying with a card with murabaha, a special markup is added to the cost of the goods, agreed in advance with the seller. The buyer returns this price with a markup in regular payments over an agreed period. In addition, with murabaha there may also be a free period - if the amount is returned earlier, then the markup is reduced or not paid at all.

The essence of the loan is preserved, but formally there is no interest, so everyone is happy. Shoppers can spend more, and banks and stores count profits.

Other systems worth mentioning

In fact, there are still many payment systems in the world with a fairly large market share in their countries. Here it is worth recalling, for example, Corti Milli from Tajikistan, the Armenian Armenian Card (ArCa) and the Vietnamese BankNet. The last two, by the way, are integrated with NSPK, i.e. cards of these systems and MIR cards were mutually accepted in acquiring terminals and it was possible to transfer money directly. But in the summer of 2022 this was canceled due to sanctions.

It’s worth remembering about Belkart. Belarusians began developing their system back in 1994 (launched in the early 2000s), and today almost 5 million cards have been issued in the country.

Considering that the population of Belarus is 10 million, the penetration is quite significant. Pensions, all kinds of benefits and salaries of public sector employees are transferred to Belkart.

It is worth remembering the Turkish Troy system, named after the ancient city with the famous horse. Although the country is dominated by Mastercard and Visa, Troy also has its own audience.

You shouldn’t forget about the pride of Kazakhstan, Kaspi Payments from the local Kaspi ecosystem. It is a QR-based system that is more similar to China's WeChat Pay and AliPay.

We also mention the Belgian Bancontact. This is a national payment system that not only issues cards, but also handles transactions in a mobile application. Here is the Dutch iDEAL, but it is more about online payments, not cards.

Africa also has its own payment systems. They have one interesting feature - they were all made on the basis of mobile operators. African telecoms at some point realized that it would be difficult to accustom a significant portion of the local population to cards, but everyone has a mobile phone. Therefore, they began to launch full-fledged financial directions on this basis. Here are the pan-African fintech services from the largest mobile operator in Africa MTN, and the Zambian JGO, as well as the Kenyan SafariCom and others.

In 2015, the DPRK was honored to launch its own payment system. Nothing is known about it, not even its name. But now North Koreans can pay for a new portrait of the leader in a state department store with a plastic card (if there is money on it, of course).