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The proposed launch of the crypto payment card by UnionPay and Danal is daring amidst recent clampdowns of cryptocurrency-based activities by the Chinese government.
Shanghai-based payment subsidiary of China UnionPay is set to launch a new set of cryptocurrency (Crypto) payment cards in conjunction with the Korean payment provider Danal. According to the South China Morning Post (SCMP), the new virtual prepaid cards will be used by travelers to facilitate payments in different countries including China.
The card from the duo of Danal and China UnionPay, the Chinese model of Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA) will draw on the former’s crypto wallet Paycoin and its equivalent crypto token to facilitate cryptocurrency transactions. These transactions will be accessible in the over 30 million outlets of UnionPay merchants in about 179 countries around the world.
The world is indeed changing with respect to the digital offerings being churned in specifically as it relates to digital payments. The coming of the coronavirus pandemic further inspired Fintechs and payment service providers to up their game in line with developing alternative solutions that can meet the ever-growing demand in payment transactions. The new UnionPay crypto payment cards will join in providing a flexible alternative for both the existing and prospective customers of the two companies.
Despite Paycoin being a digital currency, a UnionPay official confirmed to the South China Morning Post that the transaction between both firms had no cryptocurrency transaction involved in it. The official also stated that “Danal users will top up the virtual card using South Korean Won and pay with local currency. The clearing between Danal and UnionPay will be in US dollars.”
UnionPay and Danal Crypto Cards Dare China’s Regulatory Moves
The proposed launch of the crypto payment card by UnionPay and Danal is daring amidst recent clampdowns of cryptocurrency-based activities by the Chinese government through the relevant authorities.
There might be a conflict of interest in the near term as China’s apex bank, the People’s Bank of China (PBoC) continues to perfect its Digital Currency Electronic Payment (DCEP) system in which it has embarked on trials that have seen the resident of four major Chinese cities including Shenzhen transact with the DCEP. Should the DCEP, also known as the digital Yuan be launched eventually, the PBoC might enact laws which will make the digital currency to be the dominant payment system being used in the most populous nation in the world.
This presents a notable threat to UnionPay and Danal’s crypto cards which are billed to be in circulation by the end of the year. While this reality is yet to dawn on the firms, Danal’s Paycoin according to Cointelegraph has an established user base of 760,000 with the majority coming from South Korea, the initial integration efforts of the partnership might thus focus more on South Korea than on China owing to the potential markets there.
As the digital payment ecosystem continues to grow, the likes of UnionPay, Danal, and other crypto payment service providers may come to have enough regulatory hurdles particularly amongst countries with a Central Bank Digital Currency (CBDC) project