Transcription
I want to tell you about a credit card transaction that reveals everything you need to understand about the tectonic shift happening in global finance right now.
In September 2025, a tourist from Singapore walked into a luxury store in Paris. She bought a handbag worth $3,500. She paid with her credit card. The transaction was approved in 2 seconds.
Here's what's remarkable. That card wasn't Visa. It wasn't Mastercard. It wasn't American Express. It was Union Pay, the Chinese payment network. And that transaction, which took 2 seconds in a Parisian boutique, never touched the American financial system at all. 20 years ago, this would have been impossible. 10 years ago, it would have been extremely rare. Today, it's completely normal.
Union Pay is now accepted in over 180 countries. It processes more transactions annually than Visa and Mastercard combined, and most people in the Western world have never even heard of it. So, here's the question that should make you pause. How did a Chinese payment system become the world's largest? And why does almost nobody in America know about it?
Let me tell you an even more startling number. As of 2025, there are roughly 9 billion Union Pay cards in circulation globally. For context, Visa has about 4 billion cards. Mastercard has roughly 3 billion. Union Pay has more cards than Visa and Mastercard combined. And the gap is widening every year.
But it's not just about cards. It's about what those cards represent. Control over the infrastructure of daily economic life. The ability to see, track, and potentially control trillions of dollars in consumer spending. Access to data about what people buy, where they buy it, when they buy it. For 50 years, American companies dominated this space completely. Visa and Mastercard weren't just payment networks. They were intelligence gathering operations. They were tools of economic policy. They were weapons of financial warfare. And now, quietly, systematically, that monopoly is breaking.
Let me take you back to understand how American dominance in credit and payments was built because you can't grasp what's cracking without understanding the foundation. In 1958, Bank of America launched the first modern credit card, Banker Americard, which later became Visa. In 1966, a group of banks created the interbank card association, which became Mastercard. These weren't just business innovations. They were infrastructure projects that would come to define how money moves in the modern world.
By the 1980s, American payment networks were global. If you wanted to accept credit cards anywhere in the world, you needed to work with Visa or Mastercard. They set the fees. They determined the rules. They controlled access to the system. And because most international transactions required dollars anyway, American payment networks and the dollar system reinforced each other perfectly. This gave America extraordinary power, not just economic power, but surveillance power and enforcement power.
Every transaction that flowed through Visa or Mastercard could be monitored. Every business that accepted these cards could be pressured. Every country that relied on these networks for tourism and commerce was dependent on American goodwill. When America wanted to sanction a country, cutting off Visa and Mastercard was part of the toolkit. Russia lost access in 2014 after Crimea. Iranian banks were cut off. Venezuelan institutions were blacklisted. The payment networks became weapons of foreign policy. But here's what American policymakers didn't anticipate. Weaponizing the system would teach the rest of the world to build alternatives.
Let me tell you the story of how Union Pay actually rose to dominance because the details reveal something profound about how power shifts in the modern world. Union Pay was created in 2002 by the Chinese government, not by private banks, not by entrepreneurs, by the government as a deliberate strategy to create a domestic payment system that couldn't be controlled or cut off by foreign powers. At first, it only worked in China, Chinese cards, Chinese merchants, Chinese banks. But China is massive. By 2010, Union Pay already had more card holders than any other network simply because of China's population.
But card holders in China alone don't give you global power. You need acceptance. You need businesses around the world willing to take your cards. So, China used its economic leverage. Chinese tourists travel everywhere. They spend enormous amounts of money. In 2025, Chinese tourists spend over $280 billion annually on international travel. That's $280 billion that merchants around the world want access to. China made it simple. If you want Chinese tourists to shop in your store, accept Union Pay. Hotels in Europe started accepting it. Luxury retailers in New York started accepting it. Duty-free shops in Dubai, Singapore, Tokyo. They all started accepting it because Chinese tourists would choose the shops that accepted their cards. By 2015, Union Pay was accepted in over 150 countries. By 2020, over 175 countries. By 2025, it's essentially universal. You can use a Union Pay card almost anywhere. You can use a Visa card.
But acceptance is only half the story. Let me tell you about what's happening with digital payments because this is where China's advantage becomes truly decisive. In China, hardly anyone uses credit cards anymore. They use their phones. Alipay and WeChat Pay dominate. You can pay for anything with a QR code. Street food, taxis, luxury goods, everything. In 2025, over 85% of consumer transactions in China happen through mobile payment apps.
Now watch what China is doing. They're exporting this model. Alipay is accepted in over 60 countries now. WeChat Pay works in 50 plus countries. Chinese tourists don't even need to exchange currency. They arrive in Paris or New York or Dubai, scan a QR code with their phone and pay directly in Yuan. The merchant receives payment in their local currency, but the transaction is processed entirely through Chinese systems. Think about what this means. A Chinese tourist in Rome paying for dinner with Alipay. The restaurant gets euros. The tourist pays Yuan. But the transaction bypasses Visa, bypasses Mastercard, bypasses SWIFT, bypasses American banks entirely. It's a closed loop. China to merchant to China. Zero American involvement.
And it's not just tourists anymore. Let me tell you what happened in Thailand in 2024 that reveals where this is heading. Thailand announced that it was linking its national payment system, PromptPay, directly to Alipay and WeChat Pay. This means Thai people can now pay Chinese merchants directly using their Thai banking apps. And Chinese people can pay Thai merchants using their Chinese apps. No credit cards, no international wire transfers, direct instant phone-to-phone payment between two countries. By 2025, Thailand has processed over 12 billion in transactions through this connected system. And they're not alone. Singapore has done it. Malaysia has done it. Indonesia is implementing it. The UAE has launched a similar connection. Brazil is testing it.
What's being built here is a network of interconnected payment systems that completely bypass Western infrastructure. You don't need Visa, you don't need Mastercard, you don't need dollars, you just need your phone and a QR code.
Now, let me show you how this connects to credit because this is where American power is under the most pressure. The American credit system is built on a specific model. Banks issue cards. Consumers borrow. They pay interest. The banks make money from interest and fees. The payment networks Visa and Mastercard make money from transaction fees. The entire system is designed around consumer debt and fee extraction.
But China's system works differently. Alipay and WeChat Pay aren't primarily credit systems. They're payment systems linked to bank accounts or money market funds. You pay with money you have, not money you borrow. There's credit available, but it's not the foundation of the system. This creates a completely different economic logic. American payment companies need expensive transactions to justify their fees. Chinese payment companies make money from volume and from the financial services ecosystem connected to the payments. They can afford to charge minimal fees because they're monetizing data, investments, and associated services.
In practice, this means Chinese systems are cheaper. A merchant in Vietnam pays 2 to 3% in fees to accept Visa or Mastercard. They pay 0.5% or less to accept Alipay or Union Pay. If you're a business owner, which system would you prefer? The answer is obvious. And slowly globally, merchants are shifting their preference.
Let me tell you about what's happening in Africa because this is where you can see the future most clearly. In Kenya, Tanzania, Nigeria, mobile money systems dominate. MPESA in Kenya alone processes over 50% of the country's GDP through mobile phone payments. These systems were built by local companies, but they're now integrating with Chinese payment platforms. China offers African countries something America never did, technology transfer and integration without dependence. China says, "Keep your local payment system. We'll just connect it to ours. Now your citizens can trade with Chinese merchants easily, but they still use their local apps, their local currencies, their local banks." This is genius. China isn't trying to replace local systems the way Visa and Mastercard did. They're connecting to them, creating a web of interoperability where Chinese payment systems are one node in a global network, but a node that everyone connects to because China is such a massive market. By 2025, over 40 African countries have some form of payment integration with Chinese systems. Not dependence integration, but integration that makes China central to the payment flows of the developing world.
Now, let me tell you what this means for American power because the implications are profound and still unfolding.
First, data. Every transaction through Visa or Mastercard generates data that American companies can access, analyze, and in some cases share with American intelligence agencies. This isn't conspiracy theory. This is documented cooperation between financial institutions and government agencies for national security purposes. But as transactions move to Chinese systems, that data goes to Beijing instead. Chinese tourists worldwide. Their spending patterns tracked by Alipay. Merchants in Southeast Asia. Their sales data flowing through Union Pay. This is intelligence gold. Understanding global consumption patterns, supply chains, economic trends, all visible through payment data. America is losing visibility into global economic activity. Not completely, but transactions that used to flow through systems America could monitor are now flowing through systems America cannot access.
Second, fees. American payment companies extract enormous fees from global commerce. Visa and Mastercard together make over $40 billion annually in revenue. These fees are essentially a tax on global trade, money that flows from merchants and consumers worldwide to American corporations. As transactions move to alternative systems, that fee revenue declines. It's still small in absolute terms, but the trend is clear. Chinese payment systems are capturing market share in the world's fastest growing markets. Africa, Southeast Asia, Latin America, these are the future. And American payment companies are losing ground in all of them.
Third, and most importantly, leverage. When you control the payment infrastructure, you can control access to the economy. Cut someone off from Visa and Mastercard, and you've severely limited their ability to conduct business globally. But this only works if there's no alternative. As Chinese systems become universal, cutting someone off from American payment networks becomes less decisive. They can still transact using Union Pay, Alipay, WeChat Pay, and the growing ecosystem of connected local payment systems. The weapon is dulling. The leverage is diminishing. The control is slipping.
Let me show you a concrete example of how this played out recently. In early 2025, the United States threatened sanctions on a Southeast Asian country over human rights concerns. Part of the threatened sanctions package included cutting the country's banks off from Visa and Mastercard networks. The country's finance minister responded publicly. "We would prefer to maintain relations with American financial institutions, but if necessary, we can process all our international transactions through alternative systems. Our tourists use Union Pay anyway. Our merchants accept Alipay. Our banks are connected to China's CIPS. We would lose some convenience, but we would not lose the ability to conduct international commerce." The sanctions were never implemented. Whether the finance minister's response was the reason or not, the threat was revealed as less potent than it once was. And that revelation matters. Once you know a weapon isn't decisive, it stops being frightening.
This is American credit system power eroding in real time. Not through dramatic confrontation, but through the steady, patient construction of alternatives that work well enough that people start using them by choice.
Now, let me tell you about what China is doing with digital currency because this is where the advantage they've taken becomes even more significant. China launched the digital yuan, the e-CNY, for domestic use in 2020. By 2025, over 300 million Chinese people use it regularly. But China isn't keeping it domestic. They're internationalizing it aggressively. The digital yuan is being tested for cross-border payments with over 20 countries now. Tourists can use it. Merchants can accept it. Banks can settle in it. And here's the crucial part. It's not just a currency. It's a payment system, a settlement system, and a monetary policy tool all in one.
Think about what a central bank digital currency allows. Instant settlement, perfect traceability, programmable money that can have conditions attached, negative interest rates if needed, direct distribution to citizens without going through banks. These are capabilities that traditional currency and traditional credit systems don't have. China is building the financial infrastructure of the future while America is still operating the financial infrastructure of the past. Credit cards are 1960s technology. SWIFT is 1970s technology. Even Visa and Mastercard's current systems are fundamentally based on decades-old architecture. China is building from scratch with 21st-century technology and they're not burdened by legacy systems that need to be maintained or by private companies that need to profit from every transaction.
This is the advantage China has taken. Not that they've defeated American financial power, but that they've built parallel systems that work better for large parts of the world. And those systems are attracting users by the billions.
Let me tell you what troubles me most about this situation. And it's not what you might expect. The problem isn't Chinese financial systems per se. Competition can drive innovation. Alternative systems can provide resilience. A multipolar financial world might actually be more stable than one dominated by a single country. The problem is that America seems unable to recognize what's happening or to respond intelligently. Instead of innovating, American financial companies rely on lobbying to maintain their regulatory advantages. Instead of building better systems, they extract higher fees from a shrinking monopoly. Instead of competing on merit, they depend on the dollar's reserve status and American political power to maintain their position.
But political power can't substitute for better technology forever. And the dollar's reserve status is itself under pressure. As we've discussed, the foundation that American financial dominance rests on is cracking and the response is to charge higher fees and maintain older systems. Meanwhile, China is moving fast. Every month, Union Pay connects to new countries. Every quarter, Alipay and WeChat Pay expand to new markets. Every year the digital yuan becomes more internationally functional. The gap isn't closing. It's widening. And at some point, it becomes unbridgeable.
Let me be clear about what I'm not saying. I'm not saying American credit cards will disappear. I'm not saying Visa and Mastercard will go bankrupt. I'm not saying the dollar will collapse. What I am saying is that American dominance in payment systems, which has been total for 50 years, is ending. The future is multipolar. Chinese systems for Asian and developing world transactions, European systems for European transactions, American systems for American transactions, and for those parts of the world that prefer them.
And in this multipolar world, China has certain advantages. The world's largest population, the world's largest or second largest economy (depending on how you measure), the most advanced digital payment systems, the most aggressive international expansion strategy, and the political will to use financial infrastructure as a tool of national power. America built the financial infrastructure of the 20th century. It was revolutionary. It enabled enormous growth. It gave America unprecedented power. But that infrastructure is aging. The monopoly is breaking. The dominance is fading. China didn't defeat American credit system power. They simply built something better for the 21st century and offered it to a world that was ready for alternatives.
The advantage China has taken isn't military. It's not even primarily economic. It's infrastructural. They control the pipes that money flows through for billions of people. They see the data from trillions of dollars in transactions. They set the standards that new systems are being built to integrate with. And an infrastructure advantage, once established, is remarkably hard to dislodge because everyone who connects to your infrastructure becomes dependent on it continuing to work. Everyone who builds systems compatible with yours has an investment in your system's success. America had this advantage for 50 years. Now, China is building it for the next 50.
The tourist in Paris with her Union Pay card doesn't know she's part of a historical shift. She just knows her card works. That's all she needs to know. That's all billions of people need to know. And that's why America's credit system is under pressure. Not from frontal assault, not from better marketing, but from better infrastructure being adopted by billions of people who are simply choosing what works best for them. The pressure is mounting. The cracks are spreading, and China has taken the advantage not through force but through patient, systematic construction of alternative systems that are now, in 2025, becoming the preferred choice for much of humanity. We're living through the transition. Most Americans don't see it, but the rest of the world does because they're using the new systems every day. Billions of transactions building the financial infrastructure of a post-American world. Transaction by transaction, card by card, QR code by QR code, the advantage shifts. And once infrastructure advantage shifts, everything else eventually follows.