Mastercard Inc. won approval to set up a bank card clearing business in China, gaining access to a $27 trillion payments market.
Mastercard attempted to enter China’s massive market for years already, but recently it has won approval from the People’s Bank of China (PBOC). It will begin formal preparation to set up a bank card clearing institution in China.
The news is a significant step toward Mastercard being able to do business in China, where large, domestic players currently dominate. “Mastercard’s joint venture in the country needs to complete preparation work within a year,” the People’s Bank of China said in a statement.
The Communist Party ruled country is opening up its financial markets this year to allow foreign firms to set up fully-owned operations to run insurance businesses, asset management, and investment banking. China in June 2015 allowed foreign bank-card clearing providers to obtain licenses by setting up units or acquiring a local company, ending a monopoly by state-run China UnionPay Co.
China had 8.2 billion bank cards in circulation at the end of September, with 90% of them debit cards.