Mastercard announced on Tuesday night that it has received approval from the People's Bank of China, the central bank, to begin formal preparations to set up a domestic bankcard clearing institution in China.
The application was submitted by Mastercard NUCC Information Technology (Beijing) Co Ltd, a joint venture of Mastercard and a wholly-owned subsidiary of NetsUnion Clearing Corporation.
Founded on March 6, 2019, the joint venture has registered capital of 1 billion yuan ($144 million). Mastercard Asia/Pacific Pte Ltd holds 50 percent of shares in the company, Mastercard International Inc, 1 percent, and the subsidiary of NetsUnion Clearing Corporation 49 percent, according to Qichacha, a platform delivering business data, credit information and analytics on private and public companies.
"We are delighted and encouraged by this latest decision from the PBOC," said Ajay Banga, president and CEO of Mastercard. "China is a vital market for us and we have reiterated our unwavering commitment to helping drive a safer, more inclusive and seamless payments ecosystem for Chinese consumers and businesses. We remain focused on working with the Chinese government and local partners to grow the overall payments infrastructure."
Within one year, the joint venture will be able to apply to the People's Bank of China for formal approval to begin domestic bankcard clearing activity.
China and the United States pledged in their phase 1 trade agreement on Jan 15 to accelerate two-way opening of the financial service sector and expand market access for each other's companies.
The countries agreed to provide fair, effective and nondiscriminatory market access for each other's financial companies in sectors such as banking, insurance and electronic payments.
"We are encouraged that the United States and China are making progress in addressing the trade concerns that exist between the two countries," American Express said in a written note.
The U.S. company obtained approval from the People's Bank of China in November 2018 to start preparations for setting up a bank card clearing institution in China, after it formed Express (Hangzhou) Technology Services Company with the Chinese fintech Zhejiang Lian Lian Technology Co Ltd.
American Express is still waiting for regulatory approval for its Chinese joint venture to start the clearing and settlement business in China.
Experts in the payment industry applauded China's move to further open up its financial sector.
"This will help improve the competitiveness and the efficiency of bank card services and also will benefit consumers by allowing them to enjoy more diversified payment services," said Yang Tao, director of the Research Center for Payments and Settlements of the Institute of Finance and Banking at the Chinese Academy of Social Sciences.
