Yuan bank card clearing now open to foreign companies
April 27, 2015 Category Finance, Weekly
China intends to break the monopoly of UnionPay in the domestic market for yuan bank card clearing by allowing foreign and other domestic companies to apply for a clearing license starting in June. According to an agreement with the World Trade Organization (WTO), China should open its bank card clearing market by August 2015. Institutions with at least CNY1 billion in registered capital can apply for a bank card clearing license from the People’ Bank of China (PBOC) and the China Banking Regulatory Commission (CBRC). The license allows the holders to process transactions made through bank cards issued under their brands. Foreign players, such as Visa and MasterCard, will also be allowed to obtain the license by setting up a domestic unit or acquiring a local clearing agency. Companies can start applying from June 1 but it will take about two years for an applicant to go through the approval, preparatory and opening procedures. Foreign players that only offer cross-border foreign currency bank card clearing services don’t need to apply for the license but they will be required to report their business operations to the authorities. China UnionPay, the sole player in the country’s bank card yuan clearing market, has more than 4.6 billion bank cards in circulation, and a network covering over 150 countries and regions. Central bank data showed that China had 4.9 billion bank cards at the end of 2014, and the value of credit and debit card transactions totaled CNY449.9 trillion last year, the Shanghai Daily reports.
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