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American Express Co. has become the first foreign payments company to be approved to clear domestic transactions in mainland China. The move comes with approval of a network clearing license over the weekend from the People’s Bank of China for Express Technology Services Co. Ltd., an AmEx joint venture with LianLian DigiTech Co. Ltd., a Chinese fintech.
Express intends to begin processing later this year. It will process transactions charged on AmEx-branded cards and is compatible with some mobile wallet providers in China, AmEx says. AmEx initially struck a deal in late 2018 to operate in China after winning a so-called preparatory approval from the PBOC.
AmEx is not alone among U.S. card brands and payments providers in wanting access to the Chinese card-processing market. Mastercard Inc. has received in-principle approval of its joint venture with NetsUnion Clearing Corp. for a domestic bank card clearing organization, but operational approval is pending. And PayPal Holdings Inc. completed in December its deal for a 70% stake in Guofubao Information Technology Co. Ltd., better known as Gopay, to offer online payments processing in China. Visa Inc., too, is working with Chinese officials on a bank card clearing institution license.
Other deals, such as Discover Financial Services’ pact with UnionPay for mutual acceptance on their respective networks, and Total System Services Inc.’s stake in China UnionPay Data Co. Ltd., the processing unit of the card brand, started in the mid-2000s. TSYS is now part of Global Payments Inc.
Approvals such as AmEx’s may benefit from a trade agreement signed earlier this year between China and the United States that, in its first phase, enabled U.S. electronic payments providers to operate in China as wholly foreign-owned entities. The agreement also provided a mechanism and timeframe for Chinese authorities to review applications.
