China Ends Monopoly on Card Payments
China UnionPay will no longer hold a monopoly on electronic payments in China.
Companies can apply to process payments in China on June 1st, according to the Chinese State Council.
Almost half of all retail sales were paid with a bank card in China, and this represents a huge opportunity for US card companies.
Companies wishing to set up clearing business in China must apply for a clearing license, and have at least 1 billion yuan in capital. Foreign providers of cross-border transactions in foreign currencies do not need a license nor set up business inside China, but are required to be registered with Chinese regulators.
A senior executive card executive stated that obtaining a license could take 12 months.
The World Trade Organization ruled that China’s single payment regime was anti-competitive in 2012, which led to China finally deciding to open up its electronic payment market last October.
Visa and MasterCard currently process payments in China, but do so through China UnionPay’s network, a relationship that requires the payment of network access fees.
This ruling would provide a greater incentive to target the Chinese market, and also will help promote greater competition and service for Chinese consumers.