The tension between China Unionpay and Visa Inc. continues to heat up.

Earlier this month Visa warned member banks they face hefty fines if they process through China UnionPay’s clearing system transactions on dual-currency credit cards that carry both brands’ logos outside the Chinese mainland (see story).

Now, the People's Bank has drafted a plan designed to make PBOC2.0, the Chinese version of the international EMV2000 smart card standard developed solely by Unionpay, the only standard for all chip cards issued by Chinese banks by the end of 2015, Chinese media reported.

The country's banking regulators might change the current version of PBOC 2.0 so it would not be compatible with EMV, which would mean all Visa cobranded credit cards issued by Chinese banks no longer would be accepted in China, sources cited in local media suggested. Chinese banks have issued more tha 58 million Visa cards since September, according to Visa.

However, Wang Huan, an analyst at Beijing-based research firm CCID Consulting, doubts China's banking system would make the local chip card standard incompatitible with the international one.

“Technically, PBOC 2.0 is compatible with EMV2000,” he tells PaymentsSource. “Unionpay has invested a lot of money to promote the standard in the past five years, including installing new terminals. So any new changes could result in a complete denial to its previous investment.”

There likely are other ways China could block Visa acceptance in China without changing the standard, but Wang declined to speculate specifically how.

Unionpay officials declined to comment. Chinese issuers have issued more than 6 million smart cards with the PBOC 2.0 standard as of May 31.

Meanwhile, Hong Kong's 21st Century Business Herald newspaper, citing undisclosed sources from Visa’s Asia operations, reported June 15 that Visa may allow holders of dual-currency credit cards from the Chinese mainland to route transactions initiated in Hong Kong and Macau over either Visa's or China UnionPay's network.

Macau and Hong Kong are special administrative regions of China.

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