(Adds comments from Visa)
BEIJING, April 22 (Reuters) - 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 added.
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 comment. ($1=6.1969 Chinese yuan renminbi) (Reporting by Matthew Miller and Beijing Newsroom; Editing by Nicholas Heath, Kim Coghill, Shri Navaratnam and Clarence Fernandez)