American Express was notified on Friday that the People's Bank of China, the central bank, has granted preparatory approval to a joint venture established by the multinational financial services corporation in the Chinese mainland for its application for a clearing and settlement license in the mainland.
It means American Express can start doing the preparatory work for the construction of a bank card clearing network to process domestic renminbi-denominated transactions through the joint venture, which is registered as Express (Hangzhou) Technology Services Company.
After finishing all the preparatory work within a year, Express Company needs to apply for the central bank's approval before opening for business, said the PBOC in a statement posted on its website on Friday.
American Express has formed Express Company with the Chinese fintech Zhejiang LianLian Technology Co Ltd to build a network that will enable charges on American Express-branded cards to be cleared and settled domestically by the joint venture.
"We are pleased to be the first foreign payment network allowed to build a network in the Chinese mainland. This is an important next step toward being able to bring the benefits and services of our global network to Chinese customers and expanding the ability of our global card members to use their American Express cards in the Chinese mainland," said Stephen J. Squeri, chairman and CEO of American Express.
Zhang Zhengyu, chairman of LianLian Tech, said, "This is exciting news. LianLian will work together with American Express to seize this opportunity and do all the necessary preparatory work in accordance with relevant laws and regulations and with the guidance and assistance of the regulatory authorities."
Experts in the payment industry applauded the latest move of the People's Bank of China as a step forward toward the further opening-up of China's financial sector.
"It means that a second licensed card association, in addition to China UnionPay, will emerge from the segment of clearing (in the Chinese mainland), which is a crucial part of the financial infrastructure. This will help improve the competitiveness and the efficiency of bank card services and will also benefit consumers by allowing them to enjoy more diversified payment services," said Yang Tao, director of the Research Center for Payments and Settlements of the Institute of Finance and Banking at the Chinese Academy of Social Sciences.
According to the People's Bank of China, it will push ahead with the approval for market access for bank card clearing institutions in a lawful, orderly way, abiding by the principles of openness, fairness and justification.
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