The Chinese government has revealed plans to put an end on UnionPay’s card clearing monopoly in the country. Established in 2002 in Shanghai by the State Council and the central bank, UnionPay has more than 3.8 billion bank cards in circulation. In 2013, bank-card transactions increased 48% to CNY 32.2 trillion (USD 5.3 trillion) in China. 

In 2012, the World Trade Organization told the Asian nation to stop discriminating against foreign payment companies, a group of companies that also included American Express. The UnionPay’s rules, along with those requiring all Chinese automated teller machines and merchants to use its network, had prompted the WTO to make this move.

Currently, UnionPay is the only clearing service provider for CNY-denominated bank-card payments.  

Finally

The removal of the clearing monopoly will finally allow other companies such as Amex, MasterCard and Visa to tap the Chinese market and offer their services to consumers. 

According to FBR Capital Markets analyst Scott Valentin, cited by online media outlet BusinessWeek, China’s market opening would represent a ‘huge opportunity’ for US payment networks.

Other experts are saying that this is a big deal. Both Visa and MasterCard will now invest heavily to get access to this market. They expect all types of incentives to given to both the banks and merchants.

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CTMfile take: This definitely is a big deal for all three major payment card companies, but treasurers should expect to have to accept UnionPay cards for many years. However, they should now start looking for lower merchant service charges at POS at merchants in China as the competition builds