China approves local clearing organisation for Visa after years-long wait

The Chinese central bank on Tuesday (Oct 13) gave its approval to Visa to set up a locally registered bank card clearing organisation, calling the move a major step in the country’s financial opening up in an online statement.

The US card payment giant will have one year to finish its business preparations, the People’s Bank of China added.

With a local clearing organisation, Visa would be able to settle domestic yuan transactions directly with its own network.

Historically, these transactions were dominated by China’s state-owned service UnionPay, while overseas providers could process foreign currency payments for multi-currency cards.

In recent years, the establishment of joint ventures allowed for the handling of some domestic transfers by foreign service providers. Visa competitor American Express received a clearing licence for its joint venture in 2020, followed by Mastercard in 2023.

The PBOC's announcement came weeks after President Xi Jinping’s trip to the United States. During the trade negotiations ahead of the visit, both sides reached "a consensus in principle" in the field of financial services, according to China’s Ministry of Commerce, including the approval of applications from American financial institutions to establish local Chinese branches.

Visa CEO Ryan McInerney said in a press release that the approval marked "a significant step forward in Visa’s long-standing commitment to China.

"For more than 40 years, Visa has been an active contributor to China’s dynamic payments landscape. We look forward to taking the necessary steps in the process, pursuant to the PBOC’s regulations, to begin operating domestically in China," he said.

On Tuesday, Chinese Vice-Premier He Lifeng met with a delegation from the National Committee on US-China Relations, saying that both sides should inject greater certainty and stability into bilateral economic cooperation, as well as the global economy.