Visa & Mastercard to process electronic payments in China
China has introduced new rules that allow Visa and MasterCard to clear electronic payments in its domestic market.
In April this year, the Chinese government published rules that allow foreign firms to set up their own clearing companies in China and apply for licenses to the central bank starting from 1 June 2015, reported Financial Times (FT).
The rule change follows a 2012 ruling by the World Trade Organisation in support of the US, after it complained about China’s closed payments market.
The rules will end the monopoly held by China UnionPay, the country’s domestic cards and payments firm, which was previously responsible for clearing all renminbi payments.
According to a Central bank’s report, banks had issued 4.9 billion debit and credit cards and retail payments totaling RMB42 trillion ($6.8 trillion) in the country by the end of 2014.
Former China general manager for MasterCard and now greater China general manager at First Data James Chen told FT: “Visa and MasterCard need to build up their local infrastructure. In the past they just operated as a sales office. They don’t really have the physical presence.
“They need to start to recruit people and buy equipment — basically build from ground zero.”