American payment card company, Mastercard Inc, has disclosed that they will be applying for a bank card clearing license in China in the near future.
Mastercard Inc announced, on Friday, that it was still interested in breaking into China’s vast market. In a statement posted on its website, the company said that it is doing everything it can to obtain a license that would allow it to start operating in China’s domestic market.
In a bid to gain entry into China’s market, MasterCard and Visa submitted applications for a license in 2017. However, in June 2018, MasterCard withdrew its application. Visa had earlier withdrawn its application but reapplied in April 2018. The new application from Visa was not granted and this was because it lacked some supplemental materials, an official of the People’s Bank of China said.
In a statement to CNBC sometime ago, a representative of MasterCard said that it believes their participation in China will benefit not only the country but the consumers and its digital payments development. According to a source, China may be reluctant about granting the license application because of the ongoing trade tension between them and the U.S.
It will be recalled that after Russia took over the peninsula in 2014, Visa and MasterCard closed operations in Crimea because of U.S. sanctions, leaving their card users stranded. Russia had to create its own national payment system in collaboration with China’s UnionPay.
To avoid a similar situation in China, the PBOC wants the payment card companies to explain how they intend to protect cardholders and merchants in the event that the U.S and China are unable to reach an agreement. The deadline for the trade negotiations between both countries is March 2.
Last November, American Express Co. got preliminary approval to operate in the Chinese market. The approval came after they formed a joint venture with Chinese fintech company, Lianlian Group. Although MasterCard has not hinted on forming joint ventures, it has said that it has plans to explore different solutions.