China has formally announced its plans for opening up its market for clearing the transactions of domestic bank card. The move has been taken to allow foreign entities such as MasterCard Inc and Visa Inc get direct access to the lucrative market of China, worth US$6.84 trillion as per the estimates of the last year.
The regulatory reform introduced by the Chinese government will enable foreign firms to establish their own clearing companies across China as well as apply for license for bank cards from the central bank of the country. This change will officially be effected from June 1, as reported in the official website of State Council on Wednesday.
The measure has been taken up by the China government will a clear aim of ending the monopoly of China UnionPay Co Ltd. in the market, which is a domestic player and allow MasterCard and Visa, the largest debit and credit card suppliers in the world to counter-attack the monopoly.
As per reports published by the China Central Bank, the transaction for both debit and credit bank card stood at 42.38 trillion yuan or US$6.84 trillion previous year. The figures represented 33 per cent rise on the overall transaction.
This move taken by the government is expected to resolve a long drawn trade dispute between the United States and China. The World Trade Organization in 2012 observed that the policies and practices followed by the electronic payment providers in China singles out the foreign card companies.
According to the online statement published by the People’s Bank of China on Wednesday, the decision to open up Chinese markets to foreign bank cards will improve the card clearing sevices in the country through encouraging healthy competition.