Both Visa and Mastercard posted solid fourth quarter earnings and outperformed analyst estimates, yet the companies are still waiting for approval to do business in China. Though it’s been more than a year since each submitted applications to process payments in the $124 trillion market, the People’s Bank of China (PBoC) hasn’t acknowledged and accepted the applications. Once it does, the bank has 90 days to finalize a decision.
While rules introduced in 2017 were supposed to make it easier for foreign entities to enter the country, many companies believe China is using informal barriers to keep them at bay. The failure to formally accept applications from two of the biggest credit card brands in the world seems to be proof of that.
So far, American Express (Amex) has been the only foreign company to receive approval to open up card-clearing services in China — but only after it formed a joint venture with Lianlian Group, a Chinese FinTech company. Sources have said that China has pressured Visa and Mastercard to form similar partnerships.
During a call with analysts on Jan. 30, Visa CEO Al Kelly said, “We continue to work closely with the Chinese regulators and government to understand how to best proceed through the application premises,” according to Quartz.
In the meantime, Visa beat expectations on double-digit payments volume growth for the last quarter of 2018, with processed transactions at around 33.9 million, an 11 percent increase from the previous year. In addition, payments volume came close to $2.3 trillion, which showed 11 percent growth year over year.
Mastercard revealed continued gains in processed transactions, with gross dollar volume up 14 percent to $1.5 trillion, while switched transactions came in at 20.1 billion transactions, a 17 percent boost year over year. Debit and prepaid transactions went up 12.2 percent to $762 billion, while credit transactions increased 6.6 percent to $787 billion.