PBOC Grants Bank Card Clearing Licence to Amex JV

Source: Regulation Asia Editors, Regulation Asia 2020-06-15

American Express has become the first foreign company to receive a network clearing licence in China, which will allow it to compete with Tencent, Alipay and China UnionPay for market share.

The PBOC (People’s Bank of China) has granted a network clearing licence to American Express’s China joint venture, Express (Hangzhou) Technology Services Co.

The joint venture initially won approval in November 2018 to start preparing the business. Then in January this year, following the signing of the Sino-US trade deal, the PBOC accepted a formal licence application from Amex’s and its joint venture partner, LianLian DigiTech Co Ltd.

Under the newly-approved network clearing licence, the joint venture will process both online and offline payment transactions, and cooperate with Chinese mobile wallet services providers. Amex is required to start its clearing service business in China within six months.

Currently, Tencent and Alipay dominate the CNY 190 trillion online payments market in China, while China UnionPay dominates the card market, which has 8.5 billion bank cards in circulation.

Still, Amex’s approval underscores China’s commitment to opening up its financial markets, despite recent tensions with the US on issues relating to Covid-19, the national security law in Hong Kong, and an inability for the US audit regulator to properly inspect US-listed Chinese companies.

“We are pleased to be the first foreign company to receive this license,” said American Express chairman and chief executive Stephen J. Squeri. “We look forward to welcoming millions of new consumers, businesses and merchants in China to American Express, as well as continuing to enhance our support for our global customers when they travel to the region.”

According to the PBOC, the opening of the bank card market will help improve China’s payment and settlement services, advance the internationalisation of the renminbi, and facilitate other industry players.

Mastercard’s China joint venture has also been granted approval to enter the domestic bank card clearing market, though it has yet to receive a network clearing licence.

Visa has also applied, but its progress has been slower.

American Express

People’s Bank of China

PBOC Grants Bank Card Clearing Licence to Amex JV

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