Mastercard and Visa face fresh hurdles in China

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The Chinese government is not formally considering Visa and Mastercard’s year-old application to process payments inside China, another signal of China’s almost constantly changing regulatory posture toward the American card brands.

The People’s Bank of China has not acknowledged Visa and Mastercard’s 2018 application, reports the Financial Times, which cited anonymous sources. The central bank's acknowledgement of the application would force it to make a decision within 90 days.

A translation of Chinese media site Wall Street CN contends Mastercard withdrew its application and Visa’s application lacked materials. Wall StreetCN also disputes media reports that China was requiring Visa and Mastercard to set up a joint venture with local parties to operate inside China.
Visa and Mastercard did not return requests for comment by deadline.

It’s the latest in a series of regulatory headwinds for Visa and Mastercard in China. The Chinese government expressed an openness to the card brands as early as 2015, while some overtures to U.S. payment companies date as far back as 2001.

While Visa and Mastercard both expressed an interest in opening markets in China, the 2015 move stalled over requirements of local investments of more than $150 million and a substantial local presence to process payments.

China promised to clarify those requirements, but in 2017 actually added more requirements for external payment companies.

In 2018, it appeared China was lightening regulations again by rewarding a preliminary approval to WorldFirst, though there’s been little movement since and the trade dispute between the U.S. and China has further complicated U.S. corporate attempts to enter the domestic Chinese payment market market.

The American payments companies have long viewed China and its population as a key global market, but they continue to lose potential ground to the powerful Alipay and WeChat Pay mobile wallets, in addition to the UnionPay card's continued growth.

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