In a significant stride towards enhancing its presence in the global financial landscape, Mastercard has successfully secured approval to broaden its offerings within China’s massive payments market. This development comes on the heels of a diplomatic push to fortify business ties between Beijing and Washington, with Chinese leader Xi Jinping engaging in landmark talks with US President Joe Biden in the San Francisco Bay Area.
On Monday, Mastercard proudly announced that it had received the green light from China’s central bank and financial regulator to initiate a bank card business in the country, in collaboration with NetsUnion Clearing Corporation (NUCC). The approval, granted more than three years after the initial agreement in principle, allows Mastercard to issue Chinese yuan-denominated bank cards under its own brand.
China stands as a nearly cashless society, with an astounding $434 trillion in electronic transactions annually. Dominating the digital payments landscape are Alipay and WeChat Pay, the ubiquitous digital wallets from Chinese tech giants Alibaba and Tencent, respectively, collectively holding a formidable 91% market share.
Mastercard’s CEO, Michael Miebach, characterized the approval as a “milestone,” emphasizing the strategic significance of this move. The expansion allows Mastercard to process and collect fees on a broader spectrum of transactions, marking a departure from its previous authorization limited to issuing co-branded cards, such as those in partnership with China UnionPay, the state-owned bank card network.
The timing of this approval aligns with the recent high-profile meeting between Xi Jinping and Joe Biden, where the Chinese leader expressed a willingness for China to be “a partner and a friend” to the United States. Mastercard CEO Michael Miebach participated in a CEO summit on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum, where influential figures like Elon Musk and Tim Cook were also in attendance.
This development is not just a boon for Mastercard but is also framed in Chinese state media as evidence of the country’s commitment to opening up its economy. Foreign payments providers, including Mastercard, have ardently advocated for expansion in China for years, and this approval underscores China’s ongoing efforts to facilitate such openings.
Mastercard’s success follows in the footsteps of American Express, which obtained direct market access in 2020 and subsequently launched its first debit cards for yuan transactions. Meanwhile, Visa’s application for a license to offer its own cards, filed in May 2020, is still pending approval, as indicated in the company’s most recent annual report.
As Mastercard steps into this new chapter, it not only solidifies its position in the world’s largest payments market but also contributes to the evolving landscape of economic collaboration between global giants.
(Source: PYMNTS | CNN | SCMP | China Daily)
