Visa Gains China Clearance to Prepare Domestic Card Processing Network

The card network secured permission from China's central bank to begin the formal process of setting up a domestic bankcard clearing operation in the country. The People's Bank of China granted what Visa calls an 'Application to Prepare', which allows the company to start working through regulatory procedures required before launching services.

Visa characterised the approval as a significant development and said it would continue navigating the steps outlined in PBOC regulations.

The regulatory green light comes after US President Donald Trump and Chinese President Xi Jinping held discussions last month aimed at stabilising economic ties between the two nations.

The approval of our Application to Prepare marks a significant step forward in Visa's long-standing commitment to China. We greatly appreciate the important role of the leaders of the US and China in pursuing a constructive and strategically stable relationship between the world's largest economies.

CEO Ryan McInerney emphasised the company's four-decade presence in China's payments ecosystem and expressed optimism about moving forward with the regulatory process.

Despite the approval, the company still faces additional regulatory requirements before it can begin processing domestic bankcard transactions in China. The preparatory phase represents just the first stage in a multi-step licensing process.

China opened its domestic card clearing market to international operators in 2016, but imposes strict conditions on foreign entrants. According to Reuters, companies must establish local technology infrastructure and maintain onshore backup data systems within the country.

Rival network Mastercard achieved a similar milestone in 2023 when it gained regulatory clearance to process domestic yuan-denominated transactions. That approval came through a joint venture structure with NetsUnion, China's bankcard clearing platform.

The precedent suggests foreign card networks may need to pursue partnership arrangements rather than fully independent operations to gain access to China's domestic payments market.

Visa is scheduled to report its fiscal fourth-quarter and full-year 2024 financial results on 27 October. The company has not disclosed how China market access might impact future revenue projections.