The People's Bank of China (PBOC) has approved Mastercard is officially preparing to establish and operate a bank card clearing business in China.
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This is done through a joint venture (JV) with NetsUnion Clearing Corporation (NUCC), a company based in China operates a clearing house platform for third party payments. The JV must complete The preparatory work will be completed within one year. Once approved, the company can begin operations in China.
This news comes only a few weeks after Beijing has agreed New rules It has to process applications from US payment companies who want to operate in the country in good time. The rules, which are part of the US-China Phase 1 trade agreement, require the Chinese government to accept and review requests from US electronic payment services to function faster in China than before had in some cases.
Mastercard's joint venture may have been underway for some time, but PBOC approval for the agreement's early development suggests that the new regulations could make it easier for US payment companies to enter China.
If Mastercard's joint venture is able to operate in China, it will have a chance to survive in the country's massive payment market – but it will face significant competition from both domestic and U.S. companies.
China's payment market is a valuable target for Mastercard, but is already dominated by local players. China According to reports had 8.2 billion bank cards for his population At the end of September 2019, sales of over 1.4 billion euros were achieved, and the transaction volume for third-party mobile payments was forecast to reach 331.4 trillion yuan ($ 47.6 trillion) by 2020 iResearch,
It can be very lucrative for Mastercard to only capture part of the memory space UnionPay dominates the card market and Alipay and WeChat Pay Mastercard controls mobile payments in the country and may have problems getting through in China. CEO Ajay Banga spoke about the current situation of the company result calland said: "We are late for the party because the digital players there (in China) have already built up remarkably good business and frankly with very good offers."
Mastercard can try to find other ways to stand out and succeed in China. However, the increasing number of foreign companies on the market can make this difficult. Both Amex and PayPal are also expected to operate in China and are looking for ways to penetrate the Chinese payments market, possibly based on certain niches. For example, PayPal could try to use its established international customer and merchant bases to position itself as a major player in cross-border payments, especially now that it does connected in partnership with UnionPay.
Any international company will likely try to offer Chinese consumers and companies unique added value so that they can be successful in China. However, the more companies come onto the market, the more difficult it will be to find a unique perspective. Mastercard may be able to use offers such as Mastercard Send, which differentiate between cross-border bank transfers.
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