UnionPay’s monopoly to be broken
Print Edition
CHINA intends to break the monopoly of UnionPay in the domestic market for yuan bank card clearing by allowing foreign and other domestic companies to apply for a clearing license starting in June, the State Council said yesterday.
The move complies with a World Trade Organization order in 2012 that China should open its bank card clearing market by August 2015.
Institutions with at least 1 billion yuan (US$162 million) in registered capital can apply for a bank card clearing license from the People’ Bank of China and the China Banking Regulatory Commission, according to rules released by the State Council, China’s Cabinet.
The license allows the holders to process transactions made through bank cards issued under their brands.
Foreign players, such as Visa and MasterCard, will also be allowed to obtain the license by setting up a domestic unit or acquiring a local clearing agency.
Companies can start applying from June 1 but it will take about two years for an applicant to go through the approval, preparatory and opening procedures, according to the rules.
Foreign players that only offer cross-border foreign currency bank card clearing services don’t need to apply for the license but they will be required to report their business operations to the authorities.
China UnionPay, the sole player in the country’s bank card yuan clearing market, has more than 4.6 billion bank cards in circulation, and a network across over 150 countries and regions, according to its website.
Central bank data showed that China had 4.9 billion bank cards at the end of 2014, and the value of credit and debit card transactions totaled 449.9 trillion yuan last year.
A dispute between Visa and UnionPay led to a WTO order in 2012 that China should open up the market by August this year.
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