China Will Allow Foreign Companies to Process Credit Card Payments
For the first time, China may be giving foreign companies the opportunity to process credit card payments, according to a Cabinet statement yesterday. This will allow banks in China to issue credit and debit cards through companies like Visa and MasterCard.
The State Council will now permit qualified foreign firms to apply for the ability to set up card-clearing operations. Currently, China UnionPay monopolizes the credit card market in China.
Visa, MasterCard and American Express credit cards are allowed in China, but Chinese banks cannot issue credit cards unless they are branded with China UnionPay.
The Wall Street Journal reported that banks in China issued 391 million credit cards in 2013, up 18%. There was $300 billion of outstanding debt on China’s credit cards at the end of last year, over a 60% increase from a year earlier, according to a report from the People’s Bank of China.
At this time, there is no date set for when these foreign companies will be able to process payments in China.
“While we are pleased with the announcement and see it as a good step in the right direction, many details remain unclear,” said MasterCard Inc. in a statement to the Associated Press. “We will continue to monitor closely and look forward to the day when we can compete for domestic business in China.”