LINE

Text:AAAPrint
Economy

Bank card clearing market to be opened up

1
2015-04-23 08:58Global Times Editor: Qian Ruisha

UnionPay still in a strong position: experts

The State Council announced on Wednesday that China will open up its bank card clearing market, a move that would allow the participation of foreign bank card associations as well as domestic third-party payment operators in the sector.

China will adopt a license management approach for bank card clearing institutions, and qualified firms will be able to apply for licenses to operate in the market starting from June 1, according to a statement posted on the central government's official website on Wednesday.

The People's Bank of China (PBC), the country's central bank, together with the China Banking Regulatory Commission, will decide which institutions are qualified for the licenses, the statement said.

Companies applying for the licenses will need to meet certain standards, such as having registered capital of at least 1 billion yuan ($161 million) and over five years of experience in banking, bank card clearing or the payment sector, according to the statement.

Experts noted that major international bank card associations like Visa and MasterCard, as well as leading domestic third-party payment firm Alipay, all meet the standards.

Currently China UnionPay enjoys absolute dominance in the country's bank card clearing market, but experts said it will face a challenge from participation by foreign firms or third-party payment platforms in the future.

UnionPay said in a statement sent to the Global Times on Wednesday that the company firmly supports the country's decision to further open up the market.

Visa and MasterCard did not reply to requests for comment by the Global Times on Wednesday. Ant Financial, a subsidiary of Alibaba Group that operates the e-commerce giant's Alipay payment service, told the Global Times on Wednesday that it is currently "studying the State Council document."

Under the new system, both Chinese and foreign bank card associations will be subject to the same rules, which shows that the country is further opening up its financial market and abiding by the rule of fair competition, the PBC said.

"The move is a major step in China's financial reform, as bank card clearing is one of the most basic financial services," Zhao Xijun, deputy dean of the School of Finance at the Renmin University of China, told the Global Times on Wednesday.

But Zhao noted foreign firms will not necessarily have the upper hand in the competition with UnionPay and it is uncertain whether they will be able to repeat their success in China.

"It depends on whether they can offer services that appeal to Chinese consumers," he said.

Luo Yuding, a professor of finance at the Shanghai University of Finance and Economics, echoed Zhao's view. Though more players are expected in the bank card clearing sector, the leading position of UnionPay will not be affected much in the short term, he said.

"New players will face significant costs if they want to enter the market," Luo told the Global Times on Wednesday. "For instance, the cost of connecting their system to the systems of Chinese banks is quite high."

Bank card associations connect banks, shops and card users and commission is their major source of income. Luo noted that the commission charged by international bank card associations is much higher than that of UnionPay, putting the overseas brands at a disadvantage in China.

China's bank card clearing market is growing rapidly. Data released by the central bank on Wednesday showed that in 2014, 47.7 percent of payments by consumers were made via bank cards, up from 4.7 percent in 2002, when UnionPay was founded.

Also, the total number of bank cards in China has now reached nearly 4.94 billion, the central bank data showed.

Related news

MorePhoto

Most popular in 24h

MoreTop news

MoreVideo

News
Politics
Business
Society
Culture
Military
Sci-tech
Entertainment
Sports
Odd
Features
Biz
Economy
Travel
Travel News
Travel Types
Events
Food
Hotel
Bar & Club
Architecture
Gallery
Photo
CNS Photo
Video
Video
Learning Chinese
Learn About China
Social Chinese
Business Chinese
Buzz Words
Bilingual
Resources
ECNS Wire
Special Coverage
Infographics
Voices
LINE
Back to top Links | About Us | Jobs | Contact Us | Privacy Policy
Copyright ©1999-2018 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.