Rules published today by China's State Council, which take effect June 1, clear the way for Visa and MasterCard to gain a foothold in an industry that the Central Bank said handles 449.9 trillion yuan ($73 trillion) a year.
It's the most explicit China's government has been about its plans to open up the market to U.S. firms, according to David Ritter, a Bloomberg Intelligence analyst.
"Right now, you have one company that controls the entire Chinese market," Ritter said in a phone interview. "By opening it up, even a small slice of that volume is going to be significant. It's really impossible to put the revenue opportunity on it but going from zero to anything is progress."
China UnionPay Co. is currently the sole clearing service provider for yuan-denominated bank-card payments. The World Trade Organization told China in 2012 to stop discriminating against foreign payment firms.
China had 4.9 billion bank cards at the end of 2014, according to the central bank.
While China presents significant opportunity for MasterCard and Visa, it's unclear how soon the companies may benefit, said Christopher Donat, an analyst at Sandler O'Neill & Partners LP.
"It's one thing to have the rules, but rules in China aren't the same as rules in the United States," Donat said in an interview. "The devil is in the details."
Paul Cohen, a spokesman for Foster City, California-based Visa, said the company "will review the new regulations and looks forward to further implementation details to be published." MasterCard's Seth Eisen didn't immediately respond to a request for comment.