People’s Bank of China approved MasterCard Inc (NYSE:MA) to establish a bank clearing institution. It makes way for MasterCard to enter the payments market worth $27 trillion in China. The company achieved a significant milestone where several domestic and large players dominate.
Establishes a JV with NetsUnion Clearing Corp
MasterCard last year has established a joint venture with NetsUnion Clearing Corp for online payments clearing. The stakeholders in this JV – MasterCard NUCC Information Technology (Beijing) Co., Ltd. include the People’s Bank of China.
People’s Bank of China has approved the application submitted by MasterCard NUCC. The JV has to complete the preparatory work in a year to obtain formal approval to commence the bank card clearing activity in China. Chief Executive Officer and President of MasterCard, Ajay Banga, said the company is excited to get approval and encouragement from the People’s Bank of China.
Seamless payments ecosystem
Ajay further said entering China is vital for its business. The company is committed to providing a safe and seamless payment ecosystem in China for businesses and customers. MasterCard will work with local partners and the Chinese Government to improve the payment infrastructure.
American Express has received a nod from the People’s Bank of China in 2018 to establish credit cards payments clearance in China. However, Amex has got the nod of People’s Bank of China in January 2020 to establish payments clearance institution through a JV formed with LianLian Group, a Chinese Partner for clearing and settling domestic payments.
After receiving the acceptance from the People’s Bank of China, the firms requesting to establish the payments clearing institution should respond within 90 days. Once the firm completes the preparatory work, China gets a time of one month to accept the license application.
Stiff competition from established players
The US firms will face stiff competition from the established and large players in China after getting the Chinese Government nod. According to Bloomberg, 8.2 billion bank cards are in circulation as of September 2019.
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