(Adds comments from Visa)
BEIJING, April 22 China has announced it will
open up its market for clearing domestic bank card transactions,
a move that should allow foreign players such as Visa Inc
and MasterCard Inc direct access to a market valued at
$6.84 trillion last year.
Foreign firms will be able to set up their own clearing
companies in China and apply to the central bank for licenses
for bank card clearing businesses from June 1, the State Council
said on its website on Wednesday.
The measure is set to end a near monopoly held by domestic
champion China UnionPay Co Ltd, and allow Visa and MasterCard,
the world's two largest credit and debit card suppliers, to
challenge the state behemoth.
Bank card consumer transactions for both credit and debt
stood at 42.38 trillion yuan ($6.84 trillion) last year, China's
central bank said, representing annual growth of 33 percent.
The move is also set to resolve a longstanding trade dispute
between China and the United States. In 2012, the World Trade
Organization ruled that China's policies on electronic payment
providers discriminated against foreign card companies.
"Opening up the market for bank card clearing will help
improve the country's card-clearing services through market
competition," the People's Bank of China said in an online
statement on Wednesday.
"(The State Council announcement) fully represents the
principles of opening up the Chinese financial system and
achieving a fair and competitive market environment."
China had indicated in October that it would free up its
credit card market to foreign players.
A China UnionPay spokesman said the company "supports and
will firmly execute" the government's decision.
A senior credit card executive welcomed the "positive
development", but said further details and clarification were
needed from China's central bank and banking regulator.
"End to end, we could be in the market within 12 months," he
Visa and MasterCard now piggyback their services on China
UnionPay's network when accepting yuan payments and have to pay
network access fees.
Foreign players who provide only bank card clearing services
in foreign currencies for cross-border trade are not required to
set up a bank card clearing operation inside China in principle,
the statement said.
The central bank and banking regulator, China Banking
Regulatory Commission, will issue detailed rules.
"We are hopeful these new regulations will permit additional
participants in the Chinese domestic market," Visa said in a
statement. "Visa will review the new regulations and look
forward to further implementation details."
Mastercard did not immediately respond to a request for
($1=6.1969 Chinese yuan renminbi)
(Reporting by Matthew Miller and Beijing Newsroom; Editing by
Nicholas Heath, Kim Coghill, Shri Navaratnam and Clarence