America's most influential credit card firms just took things a notch higher by moving within a striking distance to China's seemingly impenetrable $27- trillion payments market.
Based on documents of a historic trade deal signing with the US, China divulged it would not take more than three months to consider applications from credit card companies like Visa, MasterCard, and American Express Co.
For MasterCard and its affiliate NetsUnion Clearing Corp that set up a company in March that still awaits the green light from the People's Bank of China to start operations, it should be a particularly welcome reprieve.
China is a very important market for the MasterCard, said Seth Eisen, MasterCard spokesperson in an emailed statement on Wednesday. Eisen pointed out that MasterCard continues to make every effort to secure the permits required to be able to operate in China. This deal represents a step forward in the "right process," he said.
The step shows progress in the fight for entry to Mainland China by the US payment networks, which have been a point of contention in the trade dispute.
Executives from the world's two biggest economies finalized a host of arrangements before focusing off on the first step of a broader economic deal, which they have sought to iron out as a historic moment in their partnership.
MasterCard Chief Executive Ajay Banga and Visa chief executive officer Al Kelly attended the announcement of a trade deal at the East Room of the White House late Wednesday.
Visa said it sees great potential to help further advance digital payments through the Chinese network, especially as the the 2022 Beijing Olympics nears, and that it is approaching entry into the country "with a long-term commitment."
Visa works closely with the Chinese government, including its central bank, the PBOC, throughout the process of applying for a bank card clearing institution license, the company disclosed.
In June 2015, China allowed foreign bank-card clearing providers to acquire licenses by creating units or acquiring a local company, breaking a state-run monopoly on China by UnionPay Co.
Yet development for Visa and Mastercard, the world's largest payment networks, has been sluggish since. In early January, American Express cleared a crucial hurdle when regulators approved its proposal to start a banking-card clearing entity with a Chinese partner.
Visa and Mastercard have long complained that their delayed entry into China means that in recent years they must pit themselves against large domestic players in a market where mobile payments have rapidly expanded.
According to iResearch, mobile transactions exceed the 190 trillion yuan mark ($27 trillion) in China in 2018; making it the largest such market in the world. The country's leading mobile payment companies are Alipay and Tencent Holdings Ltd. WeChat Pay, by Ant Financial.
