American Express has become the first foreign company to be allowed to process yuan transactions in China as it received final approval to start operating a bank card clearing network in the country.
China’s central bank announced on Saturday that it had granted a clearing licence to American Express’s joint venture with LianLian DigiTech, Express (Hangzhou) Technology Services. The company, which won initial approval two years ago, is set to start the clearing services within six months, according to the statement.
The approval means that Chinese retailers will soon be able to accept payments from American Express credit cards, the use of which has been limited to some high-end restaurants and hotels. The New York-based firm will take some market share from China UnionPay, which is currently the only bank card clearance agency in China.
The People’s Bank of China (PBOC) stressed that the move reflects China’s continued opening up of its financial industry. Foreign companies have long been trying to enter the rapidly growing Chinese market, which had 8.5 billion bank cards in circulation as of last year and where mobile transactions reached 190 trillion yuan ($27 trillion) in 2018, according to Bloomberg. Other card giants – such as Mastercard and Visa – earlier submitted applications for clearance, but have not received similar PBOC approval so far.
“We are pleased to be the first foreign company to receive this license,” Chairman and Chief Executive Officer of American Express Stephen J. Squeri said in a statement. “We look forward to welcoming millions of new consumers, businesses and merchants in China to American Express, as well as continuing to enhance our support for our global customers when they travel to the region.”
The news comes amid rising tensions between the US and China, as the Trump administration has been attacking China over its handling of the coronavirus outbreak and, most recently, over approving Hong Kong security law. Washington has been threatening to target Chinese companies’ presence on US stock markets, while blacklisting new entities and ramping up pressure on Chinese tech giant Huawei. The row between two of the world’s leading economies has already raised concerns about the future of the first phase of a bilateral trade deal, signed by the two sides at the beginning of the year.
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