The People’s Bank of China has formally opened its CNY55 trillion ($8.4 trillion) credit card clearing market for foreign bank card companies.
The rules issued by the bank and the China Banking Regulatory Commission mandate the foreign bank card firms to comply with the country’s national security and cyber security standards, and be locally based.
The move, which ends UnionPay’s monopoly in one of the world’s largest cards markets, was a long-standing demand of foreign payment card processors, especially of MasterCard and Visa.
With the central bank’s announcement, Chinese credit card clearing market is open for competition to domestic and foreign players. MasterCard and Visa have been lobbying for more than a decade for direct access to the country’s cards market.
Last year, the State Council said that China would allow foreign companies to clear electronic payments in the domestic market following a 2012 ruling by the World Trade Organisation that found the practice to be discriminative against the US credit card companies.
The development of the new mechanism will offer more personalised card services to consumers and a more secure and efficient payment ecosystem.