American Express is the first foreign payments firm allowed to build a network in mainland China, months after Beijing laid out the rules for foreign-invested payment firms over market access and supervision.
The JV, named Express (Hangzhou) Technology Services Co, is required to complete operation preparations within a year and get a nod from the central bank before running the bank card clearing business, the People's Bank of China said in a statement on its website.
The approval is a "significant step toward opening up China's bank card market to foreign investors", the central bank said, adding that it would continue to ease in an orderly way market access for clearing and settlement institutions.
Foreign card companies have been lobbying for more than a decade for direct access to China, which is set to become the world's biggest bank card market by 2020, according to GlobalData, a research company.
With Chinese finance technology company Lianlian as its partner, the U.S. firm can use the JV to build a network business that will enable charges on American Express branded cards to be cleared and settled domestically by the JV, American Express said in a release on Friday.
(Reporting by Beijing Monitoring Desk and Shu Zhang; Editing by Kim Coghill, Robert Birsel)