MasterCard Inc. is "keen" on taking advantage of opportunities in China and could establish domestic operations in that country by the end of 2016, Chief Executive Officer Ajay Banga said.
"It's a large marketplace, and we are keen to play there," Banga said today in a call with analysts after the Purchase, New York-based firm reported first-quarter results.
China's government last week indicated it plans to end a monopoly in bank-card clearing, with new rules taking effect on June 1 that could open the way for MasterCard and larger rival Visa Inc. to gain a foothold in one of the fastest-growing markets. Shares of both networks surged more than 4% April 22 after the rules were announced.
China still needs to issue regulations and clarify requirements for foreign firms and MasterCard doesn't know how long that process will take, Banga said. The company is preparing to submit a license application and work with the government to get it approved, he said.
China UnionPay Co. is currently the sole clearing-service provider for yuan-denominated bank-card payments. Even as it expands domestically, UnionPay card acceptance outside China remains low and the company hasn't succeeded in persuading foreign banks to issue their cards, said MasterCard Chief Financial Officer Martina Hund-Mejean.
Still, "with the Chinese government taking another step toward normalizing the market, you should expect all our competitors - including China UnionPay - will get their ducks in a row," Hund-Mejean said in a phone interview.
As the Chinese market opens up, foreign networks face the dual challenge of convincing local banks to issue cards processed on MasterCard's network, as well as getting more merchants accept its cards, she said.
"That classical challenge of making sure you get the issuing and acceptance footprint is well known to us," Hund- Mejean said. "We know how to do it, we just need to get the opportunity."