(Yicai) Aug. 24 -- China UnionPay was approved to boost the registered capital of the world’s biggest debit card provider by more than CNY7 billion to about CNY10 billion (USD1.4 billion) to stiffen its risk buffer and underpin business expansion, the People's Bank of China said recently.

Shanghai-based UnionPay, China’s bank card clearing association, whose formation was greenlit by the central bank, was jointly set up in March 2002 by 85 institutions, including China Banknote Printing and Minting and the country’s big state-owned commercial lenders. 

As of the end of last year, UnionPay’s network covered 181 countries and regions with over 2,500 members. It had 40 percent of the world's debit card market, surpassing Visa for the first time, whose share was 39 percent, according to a May report by US market research firm Nielsen Holdings.

“Hiking its registered capital will significantly help UnionPay to strengthen its ability to control risks as a provider of clearing services,” a financial sector analyst told Yicai. “It will also assist the company in exploring new businesses and expanding the scope of its international services.”

With the constant expansion of the global clearing business, the risk management pressures on UnionPay, which deals with huge money flows every day, is always rising, and its bolstered capital will help mitigate operating pressures, the analyst said.

UnionPay has twice before lifted its registered capital, from about CNY1.7 billion when it was set up to just under CNY2.9 billion in 2008, before raising it again to just over CNY2.9 billion in 2009.

Capital increases have become a favored way for credit card companies to mitigate operating pressures. A Chinese joint venture of American Express also raised its nominal capital to about CNY5.1 billion (USD701.4 million) last year after becoming the first licensed bank card clearing JV in the Chinese mainland in 2020.

Editors: Tang Shihua, Martin Kadiev