China has agreed to ease its monopoly on the handling of credit card payments and will allow foreign companies such as Visa, MasterCard and other electronic payment processors to have a greater presence in the country.
The move, part of efforts to open up China’s financial sector, will go some way to resolving the country’s long-running trade dispute with the US. China promised to reform and free its e-payments market in 2012 after the World Trade Organisation (WTO) said that its behaviour discriminated against US firms.
The State Council confirmed in a statement on the main government website that qualified domestic and foreign firms can apply to set up bank card-clearing operations, a process that involves settling payments between banks and vendors. The announcement came after a cabinet meeting led by premier Li Keqiang, although it did not set out a timeline or provide further details.
To date, state-controlled China UnionPay has enjoyed a near monopoly on processing and clearing yuan-(CNY) denominated payments made via bank cards and credit cards. A China UnionPay spokesman said that the company “welcomes competition” and “supports and will implement the decision to open up access to the bank card clearing market.”
Visa, the world’s largest credit and debit card company, also welcomed the move. “We look forward to seeing the specific details and working with people within China to figure out what we need to do to participate in that marketplace, where we believe we can add a lot of value,” said chief executive (CEO) Charlie Scharf.
However, some US business groups expressed scepticism about the proposed changes and said they had been pressing for a while to open China’s card markets. “We are encouraged that there are signals,” said Myron Brilliant, executive vice president (EVP) of the US Chamber of Commerce. “Until we see what that means, until we see proof of it, until we see time frames, we don’t have a deal.”
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