American Express (AmEx) has landed approval to offer bank card clearing services in China, becoming the first licensed foreign payments network to process local currency transactions, Bloomberg reports.
The People’s Bank of China has granted the network clearing license to the US card giant’s Chinese joint venture with Chinese ecommerce cross-border payment service provider LianLian DigiTech: Express (Hangzhou) Technology Services.
Fellow card issuer Mastercard landed initial approval in February to set up its bank card clearing business in China
Having won initial approval in 2018 to tap China’s $45 trillion financial market, AmEx is officially able to start its clearing service – as long as it launches within the next six months.
Despite political tensions between the US and China following the coronavirus outbreak and the continued protests for independence in Hong Kong, China has pressed on with its strategy to open its financial market to foreign capital.
BlackRock, Goldman Sachs, and UBS are among some of the other firms waiting to take advantage of China’s open financial market, which has been in the works since 2015 in a bid to break the monopoly state-run UnionPay.
Fellow card issuer Mastercard landed initial approval in February to set up its bank card clearing business in China, but Visa is still further behind.
AmEx’s bank card clearing network will process both online and offline payment transactions, and the US card giant says it will also cooperate with major Chinese mobile wallet services providers.
“This approval represents an important step forward in our long-term growth strategy,” AmEx’s CEO, Stephen Squeri, says in a statement.
The US entrant will meet some stiff competition. There were 8.5 billion bank cards in circulation at the end of last September in China, and roughly 90% of them are debit cards.
During the coronavirus pandemic, AmEx’s revenues have naturally taken a hit. Spending on the firm’s cards in May was down in the mid-30% from a year earlier, following a 45% decline in March, and its shares have fallen 18% this year.
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