Mastercard In Renewed China Push

Mastercard, in an effort to gain entry into the Chinese market, is looking toward a joint venture that may help the card giant get a credit card license in that country.

The Wall Street Journal reported on Friday (Feb. 22) that the company plans to team with NetsUnion, which operates as a clearing house for online payments and counts the People’s Bank of China (PBoC) among its stakeholders. The newswire quoted unnamed people familiar with the matter, who stated that Mastercard will refile its application to enter China with the PBoC.

The news comes in the wake of Mastercard already having had an application – marked by partnerships with a number of other Chinese firms via consortium – in place with China’s central bank for a year.

The move also would follow the approval granted to American Express last year to enter the market through the establishment of card clearing services, and where that card firm had also been offered access after setting up a joint venture with a Chinese company.

In this new approach, Mastercard would maintain a majority stake in the joint venture, where in previous attempts it had been a minority holder, sources told the WSJ.

NetsUnion (also known as Wanglian) – of which the People’s Bank and the Administration of Foreign Exchange own 22 percent between them, and payment service firms like Ant Financial Service’s Alipay and Tencent’s WeChat own 10 percent – has been allowed by China to obtain data on all mobile transactions. As estimated by Analysys, the value of online transactions through the first nine months of 2018 stood at roughly $18 trillion USD.

The Mastercard strategy shows the vagaries of entering the Chinese market, as the report noted that China has “largely ignored” a World Trade Organization finding that there has been discrimination against foreign credit card companies. China has said it would give access to card clearing services, but, stated the WSJ, firms have been trying to come into the market for years.

Mastercard had said earlier this year that it still remains committed to gaining a bank card clearing license in China.