Mastercard has secured Chinese government approval to enter the country’s electronic payment services market — 17 years after the sector was theoretically first opened to foreign investors.
In a statement on Tuesday evening, China’s central bank and banking regulator said the US card company’s application to launch a joint venture with a local company had been approved.
Securing long-delayed China market access for Mastercard, Visa and American Express was a key objective for Trump administration officials during the two countries’ “phase one” trade talks, which resulted in a preliminary trade agreement last month.
Accelerating approvals for US card companies was one of the provisions of the 90-page agreement.
Under the terms of the agreement, China said it would formally rule on US card companies’ applications within one month of their submission. Mastercard, Visa and American Express are cited specifically in the text of the agreement.
American executives had long complained that the People’s Bank of China, the central bank, would simply refuse to accept their applications to begin operations in the country.
In 2012, the World Trade Organization ruled in favour of a US suit challenging China’s de facto ban on foreign payment providers, saying the market should have been opened when the country acceded to the WTO in December 2001. Beijing, however, ignored the ruling.
Early last year the Financial Times reported that the central bank had refused to acknowledge applications submitted by Mastercard and Visa more than a year previously.
Visa is still waiting for a ruling on its application. But Chinese financial regulators recently confirmed that they were reviewing an application by American Express, which is likely to be approved.
It its statement on Tuesday evening, the PBoC said it would be “open, fair and impartial” as it continues to open the bank card market.
In private, Chinese officials say they were prepared to grant US card companies market access in late 2017 but US president Donald Trump’s move to impose punitive tariffs on Chinese imports in 2018 had made it politically impossible for Beijing to do so.
Most of the US tariffs — and counter-tariffs imposed by Beijing — remain in place pending a new round of negotiations expected later this year or in 2021. But earlier China’s finance ministry said earlier this month it was halving the rates of some of its counter-tariffs, as agreed in last month’s deal.
Over the almost two decades that foreign card companies have waited to enter the Chinese market, the competitive landscape of the country’s electronic payment sector has changed drastically.
The groups will face an entrenched state-owned monopoly, China Unionpay, that was established after China’s WTO entry.
Credit and debit cards also now account for less than 15 per cent of all online payments. The sector is instead dominated by e-wallet services provided by tech companies Alibaba and WeChat, which hold more than 60 per cent of the market.
Source: Economy - ft.com
