American Express announced its joint-venture in mainland China, Express (Hangzhou) Technology Services Company Limited (Express Company), has received final approval from the People’s Bank of China (PBOC) for a network clearing license to become the first foreign payments network to clear local currency transactions.
Amex in a statement said that is has built a network to clear online and offline domestic transactions charged on American Express-branded cards and is also compatible with the key mobile wallet players in China.
“We are pleased to be the first foreign company to receive this license. This approval represents an important step forward in our long-term growth strategy and is an historic moment, not only for American Express but for the continued growth and development of the payments industry in mainland China.‘ said Stephen J. Squeri, CEO of American Express.
China Is Important Financial Market For Western Financial Services Providers
Visa and Mastercard are also interested in the Chinese $27 trillion payments clearing market. A Mastercard joint venture with NetsUnion Clearing Corp. received its initial approval earlier this year for a Chinese payments network clearing license but is still subject to final approval by PBOC.
With Visa being an Olympic sponsor and the 2022 Winter Olympics scheduled to take place in China, the company is also working toward gaining a payments network clearing license in China but is a little behind its other two peers.
However, Visa has a deal with Chinese mobile giants Alipay and WeChat to enable foreigners to fund payments on those networks.
Also, last year, PayPal acquired China-based GoPay and became the first foreign company to provide payment services in China.
Despite tough trade talk between China and the United States, and events in Hong Kong that continue to disrupt the U.S./China relationship, the large Chinese financial market continues to be a draw for western financial services companies.
In the long run, the presence of western financial services companies in China will reduce payments barriers and should spur trade for small businesses as they seek to directly purchase from China or sell to Chinese consumers.