The People's Bank of China (the central bank) has granted Visa, the American company, authorization to begin preparations aimed at establishing a bank card clearing entity in China. This move represents the first step for Visa to operate its own payment processing network in the country.
According to the official Chinese agency Xinhua, Visa Information Technology, a company established in China by the American multinational, will have a one-year period to finalize preparations and submit the final authorization application to start its activities.
It is important to note that granting this license requires joint approval from both the People's Bank of China (PBOC) and the National Financial Regulatory Administration, meaning that the permission announced at this time does not yet enable Visa to provide such services.
If it obtains the license, the company will be able to process transactions using the local currency, the yuan, with cards issued by Chinese financial institutions for use within China. This functionality differs from the services Visa already offers for international cards used in the Asian territory.
Thus, Visa is following the path trodden by its American rivals, American Express and Mastercard, which have already obtained permission to operate bank card clearing networks in the Chinese market. American Express obtained its license in 2020, while Mastercard received final approval in November 2023 and began operating in May 2024 through a joint venture with the Chinese firm NetsUnion.
Visa had expressed its interest in obtaining authorization to create a card clearing entity in China in November 2018, making the recent approval an event occurring almost eight years after the initial request.
Both competitors entered a market traditionally dominated by the national network UnionPay, as part of the opening up of the Chinese payment sector to foreign operators. Unlike American Express and Mastercard, who opted for joint partnerships with Chinese entities, Visa obtained its preliminary authorization through a company established in the country by the multinational.
Should it receive the final license, Visa could expand the options available to Chinese banks for card issuance and payment processing, in addition to presenting new alternatives for merchants and consumers, depending on the services it is authorized to provide.