American Express, Mastercard and Visa are gearing up to submit licenses to get permission to operate in China.
Reuters, citing three people with direct knowledge of the matter, reported news that the credit card companies are aiming to submit the requests within months. Still, it may take two years or even longer for the companies to get permission from Chinese banking regulators and for the credit card companies to pass a security review, sources told Reuters.
The effort on the part of the banks comes at a time when there is friction between China and the U.S., with the two failing to agree on ways to lower the U.S. trade deficit with the country. The credit card companies have been waiting more than 10 years to get into the Chinese market, noted Reuters.
It’s not surprising they would want to get into the China market given it is on pace to become the biggest bank card market by 2020, when cards in circulation are expected to increase to nine billion from six billion last year, noted the report, citing GlobalData, a research firm.
Back in 2015, China opened up the credit card market to both local and foreign companies, yet foreign companies haven’t been able to set up operations without a roadmap from the authorities in China. In May, officials in China and Washington agreed to a deadline of July 16 for China to release guidelines so they can roll out local operations, noted the report.
The move on the part of the U.S.-based credit card companies is expected to challenge China UnionPay, the state-backed credit card company and the sole operator of the yuan bank card payment network.
“It’s exciting that the uncertainty is finally over and they have finally come out with the rule book, but it’s not going to be a fast and smooth journey,” said one of the people with knowledge of some of the U.S. payment companies’ plans, noted the report.