A Brand-New Battleground

By+Zhou+Xiaoyan

After years of knocking， the door to the Chinese market finally opened for the worlds two largest card suppliers Visa and MasterCard. Starting from June 1， qualified foreign and domestic clearing firms can apply for a license in the bank card clearing market， which has been monopolized by state-owned China UnionPay （UnionPay） for over a decade， according to an announcement from the State Council on April 22. Stock prices of MasterCard and Visa rose following the news.

Back in 1988， international payment organization MasterCard set up an office in Beijing， and five years later， Visa followed suit， both drooling over the promising bank card clearing market in the worlds most populous country. However， the two companies have been rejected from the multi-trillion-dollar market for nearly three decades and can only focus on Chinese travelers overseas card transactions.

Chinas central authorities decided to create a level playing field for all players in the clearing market as more competition will bring about more benefits for consumers.

Visa issued a statement on April 22， saying that the company is hopeful that these new regulations will permit additional participants in the Chinese market. “Visa will review the new regulations and looks forward to further implementation details to be published by the relevant authority. Visas long-term commitment to our client financial institutions and business in China remains unchanged，” read the statement.

“We welcome the announcement from the Chinese State Council and see this as a step in the right direction. As we digest and understand the details of the decree， we look forward to continuing to work with our partners in China to help consumers and businesses benefit from the convenience， security and innovative offerings of our global payment network，” MasterCard said in a statement to Beijing Review.

High hopes have been pinned on the two foreign giants and Alipay， the third-party payment segment owned by Chinas e-commerce king Alibaba， challenging UnionPays monopoly.

The end of an era

Clearing companies connect banks， shops and card users. Clearing firms turn the promise of payment into the actual transfer of money from one bank to another and make profits mainly by charging commissions on transactions.

Up until now， UnionPay is the only clearing service provider for yuan-denominated bank card payments in the country. Established in 2002， UnionPay has made great contributions to the rapid development of bank cards in China by inventing a whole set of bank card clearing standards and establishing an infrastructure network that allows Chinese customers to swipe bank cards in shops， hotels and restaurants.