No Tough Licensing Restriction to be Implemented to Foreign Bank Cards
China is not planning to impose a tough licensing restriction to overseas bank card providers that are planning to enter the country’s US$7 trillion card payment market. A senior bank official said that in October the industry was concerned that the Chinese government will limit the number of licenses that are issued to foreign card providers and force them to operate using joint ventures with local partners. But the vice governor for the People’s Bank of China Fan Yifei stated that there are no such plans to bring in such requirements.
Fan said that they would be actively and gradually opens up the country’s card payment market based on laws and regulations so fair competition will be encouraged. Foreign card firms such as Visa and Mastercard are lobbying for more than ten years to have a direct access into China’s growing card market that is said to become the world’s largest card market by 2020. The State Council and China’s Cabinet said in April that they will be allowing foreign firms to apply to the central bank for licenses to operate bank card clearing businesses starting in June. A move that was aimed as a 20122 ruling by the World Trade Organization that stated China was discriminating against US credit card firms.
As of the moment China UnionPay Co. a State controlled enterprises has monopoly on yuan payment cards that are issued and used in the country. As China gradually opens up it card market, more institutions will be entering the interbank clearing market. UnionPay also competes and collaborate with foreign newcomers. Bank cards transactions stands at 42 trillion yuan as of last year and shows an annual growth of 33 percent and the central bank released a drafted implementation regulation that comes with detailed measure and will be finalized soon.