China’s central bank has shunned applications from international card brands Visa and Mastercard to process renminbi payments, despite Beijing introducing new rules in 2017 to allow greater market access for foreign players, two sources told the Financial Times.
Overseas companies have been seen their attempts to enter China’s $124 billion payments market repeatedly blocked or frustrated by what they see as informal barriers used to limit competition against domestic brands. This has also been a key issue pushed by the US during its trade war with Beijing.
Visa and Mastercard submitted their applications to the People’s Bank over a year ago, following the new regulation allowing wholly-owned foreign businesses in the sector. The bank never formally acknowledged receipt of the submissions, however, the sources said.
“It’s a funny spin on World Trade Organisation compliance. Yes, China will have due process for the application once they’ve accepted it, but no one ever thought it would be possible not to accept the application,” one source said.
Despite the 2017 rules, the first major international company to win approval for a renminbi-based card clearing company, American Express, opted to establish a 50-50 joint venture instead of seeking whole ownership. The two sources said the government has also pressed Visa and Mastercard to do the same.