Visa, MasterCard apply for permission to compete against Union Pay in China
Foreign debit and credit card companies face a long fight with local electronic payment market leader UnionPay as industry supervision is still evolving and customer needs are diverse, experts said.
US card network Visa has applied for a license from China’s central bank to operate in the Chinese market, it said in an email on Friday.
MasterCard, another US-based card company, is also preparing to apply for a license, it said in an email.
If they receive the licenses, Visa and Mastercard are expected to take a share of the Chinese yuan-denominated bank card payment market, which is currently dominated by the State-backed company that was set up in 2002.
Their license applications follow the central bank’s updated guidelines for foreign card companies seeking to operate in China, which were announced during the China-US dialogue in June.
The People’s Bank of China updated the guidelines by the end of June, according to an industry insider who is familiar with the matter.
China agreed to open the card market to foreign companies in 2015.
The strategic research firm RBR said in the news release in July that UnionPay is likely to face more competition from foreign competitors as it strives to maintain its high market share.
Any entry by foreign card giants would, however, have only a minor impact in the short run, experts said.
“Submitting application is only the first step. It may take long to get the final approval,” said Dong Ximiao, a senior analyst at Renmin University of China.
“Once they enter, foreign companies need to adapt to Chinese supervision and need to be prepared to meet the requirements of banking regulators.”
Foreign card companies are expected to come under stringent oversight in the local market, according to Dong.
Echoing his remarks, Zhao Yao, vice director-general of the Financial Innovation Research Center, which is part of the…