PBOC blocks MasterCard service

China's move to block MasterCard from processing yuan-denominated credit card transactions is because the US company violated the country's rules for capital controls, an industry expert said Monday.

China's central bank ordered in April that EPayLinks, a Guangzhou-based online payment platform, stop issuing yuan-denominated credit cards in partnership with MasterCard, the Financial Times reported Sunday.

"No payment institution is allowed to cooperate with foreign card companies in developing cross-border payment businesses involving yuan bank accounts or yuan payment accounts," the newspaper cited a document from the central bank as saying.

EpayLinks announced in March that the company was cooperating with MasterCard to issue a virtual credit card and that this would allow users to buy products online using yuan.

A member of staff at EpayLinks told the Global Times Monday that the company could not comment on the issue.

MasterCard's local branch in China did not respond to questions from the Global Times by press time.

Questions sent to China's central bank also went unanswered Monday.

"As a third-party payment agency, EpayLinks is not qualified to issue credit cards. Furthermore, the yuan is not a freely convertible currency, so the two companies' move violated China's regulations for cross-border yuan flows," Dong Zheng, a credit card expert at 51credit.com, told the Global Times Monday.

China requires all yuan-denominated payment cards issued in the country to work with the network belonging to China UnionPay.

A ruling by the World Trade Organization (WTO) dispute panel last July claimed this requirement was contrary to WTO rules.

China's Ministry of Commerce responded later in July by saying that China would review the panel's report and deal with the case in accordance with the WTO's dispute settlement procedures.