China has decided to allow foreign companies to clear renminbi-denominated electronic payments in the domestic market, thus ending UnionPay’s monopoly of the business.
Starting June, foreign card issuers can apply for licenses to run clearing business for renminbi card payments, the Hong Kong Economic Journal reported on Thursday.
The new policy is good news for Visa Inc., MasterCard Inc. and other foreign card issuers who have long been waiting to enter the mainland payment settlement market.
In 2012 the World Trade Organization ruled in favor of a complaint by the United States that China unfairly discriminated against foreign electronic payment processors who wanted to process renminbi transactions.
According to the new rules issued by the State Council, China’s cabinet, qualified clearing institutions should have a registered capital of at least 1 billion yuan (US$161.4 million) with the shareholders’ total assets amounting to no less than 2 billion yuan.
At least one shareholder with a stake of more than 20 percent, or multiple shareholders with a stake of more than 25 percent, should be on the board of the clearing institution.
The shareholders must be authorized by the People’s Bank of China and the China Banking Regulatory Commission.
Analysts said foreign card issuers may have to wait another two years before getting a license for the renminbi clearing business because of the lengthy procedures.
As of the end of 2014, the country had 4.93 billion cards outstanding, processing a combined 449.9 trillion yuan of transactions, which represented about 47.7 percent of the nation’s retail sales, according central bank data.
Translation by Vey Wong
– Contact us at [email protected]