MasterCard’s China Opening

MasterCard expects to see increasing demand for its bank-card services now that the Chinese government is opening up the market for interbank transaction clearing services, the card brand’s China chief said last week.

“We are glad to see the decision,” said MasterCard China general manager Chang Qing, in an interview with Caixin Online. “In some ways, the bank card clearing business can be seen as a kind of infrastructure, and its openness will facilitate other economic reforms and stimulate domestic demand under this ‘new normal’ period of slower economic growth.”

After six months of deliberations, China’s cabinet announced last week that both Chinese and foreign companies will be able to compete fully in the payment-card clearing business. Until now, government-controlled UnionPay has had a monopoly for yuan-denominated transactions.

But the change won’t happen instantly. License applications are expected to take a year to be granted, though that doesn’t bother Chang. “MasterCard has been in the business of bank card clearing in China since 1985, when doors to the market first opened,” he said. “Compared to 30 years, one year is not too long, and we will make every effort to prepare for the business.”

Chang also said he expected MasterCard’s long-standing cooperation with UnionPay to continue. “All clearing institutions will still face the challenge of addressing a preference for using cash in many regions of China given the country’s underdeveloped e-payment environment,” he added. “Bank card clearing businesses will need to cooperate to form a market-oriented payment ecosystem and a pricing mechanism.”

Still, with China’s new initiatives to extend roads, railways and telecommunications to the Indian subcontinent, the Middle East and Europe — the “One Belt, One Road” plan — the international card brand can bring several advantages to the table, said Chang.

“First, we have the safest, most open and easily compatible clearing networks worldwide. We’re bringing the most advanced network and services to the domestic market,” he said. “Second, MasterCard can draw on experiences from around the globe in working with standards organizations to set up criteria for the industry as it adapts to mobile technologies. Third, MasterCard has had 30 years of experience in China. The country is opening the market to foreign companies, and we are now considering what our role will be for the next 30 years.”


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