The American payments giant announced Tuesday (Oct. 13) that the People’s Bank of China (PBOC) had approved its “Application to Prepare,” which lets Visa begin work on setting up a domestic bankcard clearing operation in China.
The company called the approval a key milestone toward Visa entering the domestic payments market in China.
“For more than 40 years, Visa has been an active contributor to China’s dynamic payments landscape,” Visa CEO Ryan McInerney said in a news release. “We look forward to taking the necessary steps in the process, pursuant to the PBOC’s regulations, to begin operating domestically in China.”
A report on the approval by the Financial Times (FT) cites business registration records showing that Visa has been trying to set up operations in China since at least 2015, when it opened a local unit.
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However, that report said, getting approval to do business in China was a challenge for Visa. The country’s payments market is ruled by the government-backed UnionPay card and tech firms Aliababa and Tencent, operators of the popular Alipay and WeChat Pay apps.
The World Trade Organization in 2012 found in favor of the U.S. in a lawsuit that challenged China’s ban on foreign payments companies. The WTO said the market should have been opened when China agreed to the WTO in 2001, though China ignored this ruling.
The FT report also notes that the approval means Visa would become the first outside card network operating a wholly-owned clearing business on the Chinese mainland.
McInerney said the approval was a reflection of the “important role of the leaders of the United States and China in pursuing a constructive and strategically stable relationship between the world’s largest economies.”
In other credit card news, recent PYMNTS Intelligence research found that 36% of U.S. cardholders, or around 78 million people, had switched their primary card in the prior 24 months. Among that group, 58% elevated a card they already owned, while 42% obtained a new card.
“The numbers show that retaining top-of-wallet status involves more than preventing account closures,” PYMNTS wrote Monday (Oct. 12).
“It means recognizing when spending is moving somewhere else, often before the customer has given the issuer an obvious reason to intervene.”
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