New Chinese approval pushes "Visa" toward competition with local payment networks

U.S. payment company "Visa" has received approval from the People's Bank of China to begin preparations for establishing a local bank card clearing institution, a step that opens the door to China's payment market after years of waiting. The approval does not grant the company the right to start operations immediately, but allows it to complete pre-operational licensing requirements. Under the regulatory pathway, the company must complete preparations within a year, then submit an application to begin operations. The People's Bank of China and the national banking regulator will review the application before issuing a bank card clearing business license if conditions are met. Thus, market entry remains contingent on further approval, not an automatic result of the new announcement. The approval was issued for "Visa Information Technology" company in Beijing, a foreign-invested enterprise established by Visa in China. The step comes as Washington continues to demand expanded access for foreign companies to Chinese financial services, within economic relations that combine opportunities for cooperation and trade tensions between the two countries. Payment clearing differs from merely issuing a card bearing a global company's logo. Having a local institution allows processing and settlement of yuan transactions within China through the company's own network, according to the South China Morning Post. These transactions were historically dominated by China's UnionPay network, while foreign service providers were limited to aspects such as processing foreign currency payments for cards.