Visa and MasterCard, the world’s two largest credit and debit card firms, have been trying to enter China’s cards market over the past ten year.
China’s cards market is estimated to emerge as the world’s largest by 2020.
The country’s central bank and the China Banking Regulatory Commission have issued rules regarding this and the firms foraying into the market need to hold CNY1bn ($152.2m) in registered capital in a local company, Reuters reported.
Besides, foreign bank card companies must meet the country’s national security and cyber security standards and should be based in China.
PBoC said:"In the future there will be more diverse participants in the domestic bank card market, with many bank card brands competing on a level field."
Last year, the State Council and China’s cabinet said that the county would permit foreign companies to operate bank card clearing businesses. However, rules pertaining to opening up of cards market came more than a year after that announcement.
According to a statement released by the People’s Bank of China (PBoC), bank card consumer transactions in the country touched CNY55 trillion in 2015, accounting for 48% share in the total social consumption.
State-run China UnionPay is currently the dominant player in the market.
China’s latest move is seen as a reply to a ruling the World Trade Organisation (WTO) in 2012. The ruling said that China discriminated against US credit card firms.
PBoC said that the standards and processes for qualified foreign firms to establish bank card businesses will be same as those set for local companies.
The central bank said foreign investors are also permitted to acquire domestic card clearing firms after meeting security standards.
Visa said in a statement: "We are reviewing the new regulations and look forward to the opportunity to formally submit our license application for early consideration."
Image: People’s Bank of China headquarters in Beijing. Photo courtesy of user:Yongxinge/Wikipedia.
