American Express has won initial approval from the People’s Bank of China (PBOC) to process the nation’s currency, the global financial services network announced in a press release Saturday (June 13).
Express Company, a joint venture between American Express and LianLian DigiTech, a Chinese FinTech services company, are expected to begin processing transactions later this year.
It comes as political tension between the U.S. and China is rising, sparked by the COVID-19 pandemic. Last month, President Donald Trump blamed China for the outbreak at a Fox News virtual Town Hall.
“I think they made a horrible mistake and didn’t want to admit it,” he said, according to The Hill. “… This virus should not have spread all over the world. They should have put it out.”
The deal reflects China’s continued opening up of its $45 trillion financial industry to support growth and attract foreign capital, according to Global Times.
Express Company has built a network to clear domestic transactions charged on American Express cards and is also compatible with mobile wallet companies in China.
“This approval represents an important step forward in our long-term growth strategy and is an historic moment, not only for American Express but for the continued growth and development of the payments industry in mainland China,” said Stephen Squeri, chairman and CEO, in a statement.
Zhengyu Zhang, chairman of LianLian, said as globalization continues, his company has introduced China’s mobile payments to the world while connecting with giant financial companies.
“We are confident that our joint venture with American Express will provide more diversified bank card services to consumers and commercial customers in and outside of China,” he said in a statement.
Walter Liu, CEO of Express Company, said he is focused on continuing the preparation work for a launch by working with the regulators and partners.
Express Company must receive the central bank’s approval before opening for business, said the PBOC in a statement.
ChinaDaily.com reported that experts in the payment industry applauded the PBOC action as a step forward toward the further opening up of China’s financial sector.
“It means that a second licensed card association, in addition to China UnionPay, will emerge from the segment of clearing (in the Chinese mainland), which is a crucial part of the financial infrastructure,” he told the online news service. “This will help improve the competitiveness and the efficiency of bank card services and will also benefit consumers by allowing them to enjoy more diversified payment services.”