PBOC Could Delay Visa and Mastercard’s Renminbi Debuts Indefinitely


The Chinese central bank is stalling on applications made by overseas payment card giants to process renminbi payments, despite the much-vaunted launch of measures to open the domestic market since 2017.

Sources said to Financial Times that the People’s Bank of China (PBOC) has not yet acknowledged applications to access the domestic payments card market made by Mastercard and Visa over a year ago.

Because application regulations dating from 2017 mandate that a decision be made within 90 days of acknowledgement, PBOC’s refusal to review the applications gives it a legitimate route to delay the process indefinitely.

“It’s a funny spin on World Trade Organisation compliance,” said a source speaking to the Financial Times. “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.”

Foreign companies as well as US trade negotiators have complained about the use of informal measures by Beijing to thwart foreign access to the Chinese market, despite the central government committing to further opening of China’s financial sector ever since the 2018 Bo’ao Forum.

Beijing announced that it would open the payment cards market back in October 2014, after the WTO ruled in 2012 that China discriminates against foreign payment providers in response to a complaint from the US government.

Visa submitted an application in July 2017, while Mastercard did the same later that year.

While American Express obtained preliminary approval from PBOC to launch a renminbi bank card clearing company in November, the vehicle will be a 50-50 joint venture with a domestic partner.

PBOC data indicates that even the ascent of mobile payments has done little to dent the growth of Chinese payment card transactions, which reached 848 billion yuan in the year to 30 September 2018, for a YoY rise of 11.5%.

This immense market has enabled state-owned monopoly player China Unionpay to acquire a 36% share of the global bank card payments market according to figures from payments research group RBR, as compared to 32% and 20% stakes for Visa and Mastercard respectively.

American Express, Mastercard and Visa can all issue foreign-branded credit cards via partnerships with domestic commercial banks in China, but these cards can only facilitate foreign currency transactions, and as such are primarily used by Chinese consumers while travelling abroad.