Asian Tech Press (Nov 20) -- China's central bank has given approval for a Chinese joint venture of U.S. credit card company Mastercard Inc. to start processing local transactions.
The People's Bank of China (PBOC) issued a bank card clearing license to Mastercard NUCC Information Technology (Beijing) Co., Ltd (Mastercard NUCC) on Nov. 17, according to an announcement from the central bank.
Mastercard NUCC is a joint venture between Mastercard and NetsUnion Clearing Corporation (NUCC), the operator of an online payment settlement platform for nonbank payment institutions in China.
With the administrative approval, Mastercard NUCC will be able to authorize its member institutions to issue and accept yuan-oriented bank cards under the Mastercard brand in China.
With this, China has approved American Express Co. and Mastercard, two foreign bankcard clearing institutions, to enter the domestic market.
There are currently three bankcard clearing institutions in China, namely China UnionPay Co., Ltd. and Express (Hangzhou) Technology Services Company Limited (Express Company), a joint venture between American Express and Chinese fintech firm Lianlian DigiTech Co., Ltd, and Mastercard NUCC.
In June 2020, PBOC, together with the former China Banking and Insurance Regulatory Commission (CBIRC), approved Express Company's application to open as a bankcard clearing institution, and issued it a license to conduct bankcard clearing operations.
And in August of the same year, Express Company officially opened for business.
It took Express Company approximately one and a half years to prepare for and obtain the license, versus a three and a half year period for Mastercard NUCC.
After American Express and Mastercard obtained the license one after another, its U.S. counterpart Visa Inc. is still seeking to obtain such a license.
Visa has submitted a qualification application to PBOC to establish a bank card clearing agency in China, the first foreign card payment organization to do so, according to an August 2017 report by Chinese media outlet Beijing Youth Daily.
However, as of now Visa has not yet gotten permission to prepare for a bank card clearing organization in China.
According to PBOC regulations, market access for bank card clearing organizations involves two stages: preparation and opening, both of which require the submission of an application.
The applicant shall complete the preparatory work within one year from the date of approval of the preparation, and shall not engage in bank card clearing business during the preparatory period.
Upon completion of the preparatory work, the applicant may submit an application for opening to PBOC if the applicant has the conditions for authorization.
This also means that Visa, after more than six years of long-distance running, still needs to get over two important hurdles before it can successfully reach the finish line.