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Visa's UnionPay ban remains unenforced

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After making major headlines in China and the US with its call in May to stop using UnionPay, Visa has become strangely mum on the issue.

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Reports said that Visa informed its member financial institutions this May to stop using UnionPay as an international payment method from August 1. The first violation would result in a charge of $50,000, and further violations would cost them $25,000 each month.

However, "UnionPay cards co-branded with Visa can still be used overseas," said a source close to the matter Monday, who refuse to reveal the identity due to the sensitivity of the issue.

Calls to major banks all confirmed that they have not yet received any information about the ban on UnionPay in overseas markets. A customer service agent with UnionPay did not know whether the Visa ban had taken effect.

Established in 2002, China UnionPay links all major banks and payment systems in China. The company has expanded to 90 countries and regions around the world. By using UnionPay cards overseas, Chinese customers can avoid the one to two percent currency exchange fees.

"Although Visa has a great number of cardholders in China, it still cannot set up a complete card issuing system," Xinhua News Agency quoted Guo Tianyong, professor with the Central University of Finance and Economics, in an earlier report.

"This means Visa's foreign cardholders can only use China UnionPay's payment system in China, which leaves Visa low profit margins. With China UnionPay holding back Visa's expansion in China and Visa doing the same in overseas markets, conflict is unavoidable," Guo said.

Visa was not available for comment Monday.