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American Express gets regulatory approval to enter Chinese payments market

American Express has won regulatory approval to become the first US credit card company to enter the Chinese payments market and start building its own payments network.

AmEx antitrust case

American Express gets approval to enter Chinese payments market

The company said that the Chinese central bank has given it preliminary approval to handle payments in yuan. AmEx can now start setting up the payments network through a joint venture with LianLian Group, its Chinese partner.

In every other market around the world, AmEx processes transactions through its own network, but in China, they have been handled by state-controlled payments giant China UnionPay.

Once AmEx has built its own network in China, it will be able to use it to process payments on AmEx branded cards and collect fees on far more transactions.

In China, AmEx, Mastercard and Visa can only issue co-branded cards, typically in partnership with UnionPay. The cards use UnionPay’s network for yuan payments in China, and the US companies’ networks for payments abroad in dollars or other foreign currencies.

AmEx now has a shot at taking some of UnionPay’s business inside China. Mastercard and Visa are also seeking permission to build their own networks after Beijing last year started letting foreign card companies apply for licenses.

“We continue to work closely with the Chinese government as we proceed through the application process,” a Visa spokesperson said.

All three US companies struggle to make inroads in China, where UnionPay has solidified its hold on the bank card industry and tech companies Ant Financial and Tencent dominate the mobile payments market.

The Chinese government dragged its feet for years on opening up its credit card payments market to foreign companies, even after the World Trade Organisation ruled in 2012 that China UnionPay was operating a monopoly.

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