China’s central bank has given its approval to the issuance of the country’s first bank card clearing operations license in anticipation of the entrance into the sector of foreign-invested players.
On 18 June the People’s Bank of China (PBOC) announced that it and the China Banking and Insurance Regulatory Commission (CBIRC) had approved China UnionPay’s application for the first bank card clearing operations license (银行卡清算业务许可证).
Industry sources said to Securities Journal that the release of the first bank card clearing operations license is intended by regulators to pave the way for the entrance of foreign bank card organisations into the Chinese market, following efforts to further open the domestic financial sector.
PBOC itself said that the next step would be it to lawfully advance work in relation to entry into the Chinese bank card market in accordance with the principles of openness and fairness.
In November 2018 PBOC and CBIRC gave their approval to the bank card clearance organisation preparatory application submitted by Liantong (Hangzhou) Jishu Fuwu Co., Ltd. (连通（杭州）技术服务有限公司), whose largest shareholder is American Express.
The move made Liantong the first foreign-invested entity to obtain such approval, putting it in plum position to become China’s second successful applicant for a full license.
China’s domestic bank card clearing sector has long been dominated by China UnionPay, with its own “China Bank Card Sector Development Report (2019)” (中国银行卡产业发展报告（2019）) indicating that its share of key markets further increased in 2018.
The total number of UnionPay cards issued globally exceeded 7.59 billion last year, while its global network covered 174 countries and regions, including 73.7 million vendors and 2.86 million ATM’s.