China is making small moves towards opening up its credit card market to foreign firms, easing the near monopoly that state-controlled China UnionPay has on payments processing.
A statement by the State Council, China’s cabinet, on the government website on Wednesday said that qualified domestic and foreign companies may apply to set up bank-clearing operations, a process that involves settling payments between banks and vendors.
But with no timeline or further details provided, it is unclear how quickly this move to open up China’s financial sector will come into effect.
China UnionPay Co. has a near monopoly on processing and clearing home-currency card payments in China, and a close relationship with China’s central bank. Visa, Mastercard and American Express are already accepted, and these companies are allowed to process transactions if they are made on cards issued by banks in another country. But Chinese banks cannot issue cards with US card processors unless they are branded with China UnionPay.
When this change finally comes into effect, US firms will have much better access to China’s growing middle-class, where credit card payments are only expected to grow.
A World Trade Organization panel found that China’s rules governing access to its domestic electronic-payments market don’t provide equal treatment to foreign credit-card and debit-card issuers, but so far China has been slow to change its market rules.
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