American Express Co. cleared a key hurdle in its bid to accessing China’s $27 trillion payments market after the central bank accepted its application to start a bank card clearing business.
The People’s Bank of China made the announcement on its official Wechat account Wednesday, without giving more details. The decision to accept the application signals that it’s moving closer to final approval.
AmEx in November 2018 became the first foreign company to win permission to start preparation for the business after forming a joint venture with LianLian, a Chinese fintech-services firm.
The latest move shows progress in U.S. payment networks’ battle for access to mainland China, which has been a point of contention raised in the trade dispute with the U.S. China on Thursday announced Vice Premier Liu He will travel to Washington to sign the first phase of the trade deal with the U.S. on Jan. 15, confirming a ceremony announced by President Donald Trump.
China in June 2015 allowed foreign bank-card clearing providers to obtain licenses by setting up units or acquiring a local company, ending a monopoly by state-run China UnionPay Co. But progress in entering China has been slow for Visa Inc. and Mastercard, the world’s two biggest payment networks, with neither firm as of yet obtaining approval.
The Communist Party ruled country is opening up its financial markets this year to allow foreign firms to set up fully owned operations to run insurance businesses, asset management and investment banking. BlackRock Inc. and Goldman Sachs Group Inc. are among a bevy of firms that are preparing to pile in full bore to capture profits from China’s fast growing wealth.
China had 8.2 billion bank cards in circulation at the end of September, with 90% of them debit cards.
AmEx will pit itself against large domestic players and a well-developed market for mobile payments. Mobile transactions topped 190 trillion yuan ($27 trillion) in China in 2018, making it the world’s largest such market, according to iResearch. Ant Financial’s Alipay and Tencent Holdings Ltd.’s WeChat Pay are the dominant firms.