Banking News

RMB clearing approval won by American Express affiliate

RMB clearing approval won by American Express affiliate

(9 November 2018 - Asia) American Express (AMEX) has been granted approval to enter the Chinese payments card market ahead of Visa and MasterCard.

China’s central bank the People's Bank of China (PBoC) has approved American Express affiliate LianLian to issue bank cards in China, making AMEX the first foreign entity to be approved for a licence. The card scheme’s JV with China's LianLian has positioned the group strongly to build a network business that will enable charges on AMEX branded cards to be cleared and settled domestically by the JV. Subsidiaries of AMEX own 50 percent of the group along with a privately owned Chinese company, Zhejiang Junbao Communication Technology, owning 50 percent.

Foreign card companies have been required to partner with state owned UnionPay for access to the country’s payments network until now. Foreign card companies are expected to find market share growth challenging in China given the dominance of UnionPay. Both Mastercard and Visa have submitted licence applications but are still awaiting approval from PBoC. A wholly-owned unit of Visa submitted an application for the same license in August 2017 but has not yet received approval and MasterCard has not stated whether it has submitted an application though it is expected to do so. AMEX, Visa and MasterCard currently issue branded cards in China however acceptance is poor because they can only be used to execute foreign-currency payments.

LianLian Pay and World First also maintain a partnership to enable sellers on Amazon China to repatriate their funds. LianLian facilitates direct connection to Chinese online marketplaces, collection of CNY into Chinese receiving accounts and fast foreign currency credit into local bank accounts. The World Trade Organization (WTO) ruled in 2012 that China unfairly discriminated against foreign card companies. It has taken six years to develop regulations before approval was granted to a foreign card group for RMB clearing.

AMEX CEO Stephen Squeri stated “We are pleased to be the first foreign payments network allowed to build a network in mainland China. This is an important next step toward being able to bring the benefits and services of our global network to Chinese customers and expanding the ability of our global Card Members to use their American Express Cards in mainland China. We are also pleased to be working alongside LianLian, a long-term partner of American Express.”

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