UnionPay, China’s answer to Mastercard and Visa, will launch a prepaid cryptocurrency card with Korea’s Danal. The Korean firm is an established payment provider and major Korean payment gateway with more than 100,000 retail outlets and 80,000 online merchants. It also has a strategic partnership with Samsung Pay. But the point of note is that China’s UnionPay is partnering for a cryptocurrency solution, despite the ban on cryptocurrency within China.
And it appears Korean’s will even be able to use the card when traveling to mainland China. That’s the purpose of the alliance – to enable Korean’s to spend PayCoin internationally and reduce foreign exchange fees.
The currency on the card is PayCoin (PCI), a cryptocurrency issued by Danal. The company’s fintech subsidiary launched PayProtocol, which uses enterprise blockchain Hyperledger Fabric to create its own permissioned payments network. It claims it has plans to offer a variety of cryptocurrencies for payments in the future.
One of the key rationales behind PayCoin is that if merchants adopt it, they have far lower transaction fees. And the lower fees are sometimes passed on to customers as rewards if the merchant chooses.
PayProtocol has 60,000 merchants signed up in Korea, including most of the main convenience store chains such as 7-Eleven and CU, as well as the likes of Domino’s and KFC. More than 750,000 people have registered to use the app. However, the cryptocurrency (PCI) turnover is not significant, with volumes most days varying from $500,000 a day to the single-digit millions.
What China’s UnionPay brings is greater overseas reach, at 30 million affiliated stores. Danal is the first Korean payment gateway to sign an agreement with UnionPay.
The cards will go live by the end of the year.
In other news, while PayCoin passes on transaction savings to merchants, it looks like PayPal has no plans to lower charges to merchants when customers pay retailers using cryptocurrency.