Dateline: Kuala Lumpur, Malaysia
Chances are your western debit or credit card is a dinosaur. A dinosaur that shares your every personal detail with the US government… even if you don’t live in the United States.
While walking through one of Kuala Lumpur’s many luxury shopping malls the other day, I stumbled across something I’d never seen before: a MEPS ATM.
MEPS is Malaysia’s interbank payment system. It’s owned equally by a dozen or so local banks as a cooperative tool to enhance payment processing here. Now, they are rolling out their own branded ATMs as a way to increase the availability of new technologies they’ve adopted.
For years, countries here in Asia and increasingly in Europe have used chip-and-PIN cards for added security. If you live in the United States, chances are you’ve never had a chip-and-PIN card because US banks have almost entirely not adopted the technology yet.
US banks are too busy having their systems hacked into and balance sheets crumble to implement modern technology, although my American Express Platinum card does now have a lower-grade chip-and-signature technology. Cards without a hefty fee almost never have it.
However, chip-and-PIN isn’t the only technology that is making credit and debit cards more advanced here in the first world. In addition to new technologies, new networks are being set up in markets like China.
The biggest example of that is China’s Unionpay system.
As the only interbank system in China, Unionpay is used by banks on the Mainland, Hong Kong, and Macau for ATM, debit, and credit card transactions. Beijing’s Temple of Heaven serves as the hologram on every Unionpay card.
And it’s a perfect way to offshore your credit card the same way you offshore your banking.
Just as Brazil built its own internet network to bypass the NSA and the BRICS want to build out their own version of the SWIFT network for banking, China created Unionpay 13 years ago to serve as its own interbank for payments.
The unique benefit of Unionpay is that is controlled by the People’s Bank of China and has no relation to the western banking system.
In fact, the Russian government is using the system while they build their own payment system to get away from western systems. One Russian billionaire commented that he got a Unionpay-backed card to protect himself after US sanctions were imposed on Russia.
In fact, an entire group of Russians deemed to be close to Vladimir Putin were literally shut out from using any part of the US banking system, including MasterCard and Visa. Even if you’re not a US citizen or subject to FATCA, the US government can shut your ability to access your money anytime they want if you rely on their infrastructure.
My friend Jayant Bhandari talked about the concept of getting a bank card not reliant on US companies at our recent Passport to Freedom conference. If you’re on our insiders email list, you should be getting an email about how to get your hands on the videos from the event very soon.
Just as owning a .com domain name puts your website under the control of a US company that takes orders from the US government, my American Express card is looped in with whatever spying systems the US government puts in place.
The same goes for Visa, MasterCard, and Discover networks.
Even if you’re not a US citizen, US resident, or US bank account holder, having your money tied up in a network that relies on US companies to give you access to that money could be problematic, especially if you are considered politically undesirable or have a connection to some sanctioned country.
You can get a Unionpay card by opening a bank account in Mainland China. HSBC in Hong Kong also issues Unionpay cards. In fact, some westerners complain about the Unionpay cards from HSBC since they can’t be used for online commerce in most western countries.
There’s always a trade-off, but Unionpay does give you an extra layer of international diversification from a country not eager to be told what to do by the west.
Interestingly enough, wealthy Chinese are even using Unionpay for capital flight out of Mainland China.
Unionpay cards, also known as CUP, work in about 100 countries around the world when you exclude those co-branded with western networks like American Express. CUP isn’t some half-cocked network; it’s the second largest payment network on earth behind Visa.
Citibank in the United States is one bank that allows ATM withdrawals using Unionpay cards. The PULSE network in the United States apparently also allows use of Unionpay cards, and Discover signed a deal with Unionpay to process transactions for their cardholders in North America as well.
Here in Malaysia, OCBC – one of my favorite banks – offers a Unionpay card that processes domestic transactions in Malaysian ringgit and overseas transactions in Chinese renminbi. This is a great way to gain both banking system and currency diversification, although you’ll need a Malaysian residence permit to open a bank account here.
Many countries have their own interbank networks, but most of these networks are in bankrupt western countries that would likely be all too happy to play ball with each other if you were their target.
One other payment network you may have heard of is Japan’s JCB, but I’ve found opening a bank account in Tokyo to be almost impossible, especially compared to the surprising ease of banking in China.
Even Japanese banks overseas I’ve approached in Singapore wave their hands over their face in an effort to get you out of there.
I’m always suggesting new ways to gain international diversification. Beyond just offshore banking, doing business offshore, and a second passport, little steps like getting a foreign bank card can add up to a big result in the long run.
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