American Express has passed a major hurdle in efforts to become the first U.S.-based credit network to offer services in mainland China.
The Chinese central bank formally accepted American Express’ application to clear and settle domestic bank card transactions, the Wall Street Journal reported Thursday. The New York credit card company applied as part of a venture with China mobile payment provider Lianlian Group.
China announced in 2015 that it would open its domestic processing market to outsiders, according to a report from Fox Business. China has about 6.7 billion bank cards in circulation, with government-owned UnionPay dominating the market with 90 percent market share, according to the Wall Street Journal report.
American Express and Lianlian group have partnered since 2012. Then, AmEx licensed its Serve system to Lianlian so it can offer the ability for mobile phone users to top-up minutes, pay bills and purchase other goods and services, according to an American Express release.
Lianlian is the largest non-banking third-party payment service in China and is committed to a global network and increasing acceptance of the renminbi, the Chinese currency, according to the company. Lianlian counts PayPal and Apple among its strategic partners.
Barriers to American companies operating in China are so high that Chinese institutions dominate many areas, especially in financial. The regulatory consent given to American Express marks an important, if only preliminary, step into U.S. entry into the sector, according to the newspaper. Chinese officials will likely tout American Express’ progress to American economic officials headed to Beijing next week for meetings to try and settle escalating trade disputes.
Still, the fact American Express decided to partner with Lianlian in the bank card transactions approved Thursday is a sign that it continues to be difficult for foreign companies to gain access to financial services of all sorts in the country, said Lester Ross, a Beijing-based lawyer at WilmerHale, who advises U.S. businesses operating in China. Authorities are “opening a door but only for firms to crawl through,” he told the Wall Street Journal.