(12 June 2020 – China) The People’s Bank of China (PBoC) has approved American Express to start operating a card clearing network that will process transactions in yuan. The move gives the US group expanded access to the enormous domestic consumer population with the network expected to launch by Q4 2020.
The Chinese central bank allowed American Express to form a joint venture (JV) with Chinese Fintech LianLian DigiTech Co. to build the payment network. China has traditionally restricted foreign companies access to its domestic financial sector. In its recent trade deal with the US however, Beijing agreed to remove barriers and streamline US banks, credit card companies and financial services providers to enter its domestic market and conduct more business within its borders.
A Mastercard JV received in-principle approval from the central bank in Q1 2020 to start building a rival card-clearing system and it intends to apply for formal approval to begin operations by mid-2021. Visa has partnered with mobile payment giants Alipay and WeChat Pay to enable foreigners holding Visa cards to fund payments on those networks. It also has a co-branded deal with WeChat Pay’s owner, Tencent Holdings Ltd., that facilitates payments made by Chinese travelers outside the country.
“The approval from the People’s Bank of China was an important step forward in the company’s long-term growth strategy” stated American Express Chairman and CEO Stephen Squeri.