MasterCard says its new patent will speed up transaction times for crypto-currencies and provide security for the payee. Photo: iStock

How’s that expression go? It’s better late to the party than never.

It took forever, but the People’s Bank of China (PBOC) has finally approved MasterCard to formally create and operate a bank card clearing business in China, Business Insider reported.

Even CEO Ajay Banga admitted, “We are late to the party because the digital players there [in China] have already built substantially good businesses and, frankly, with very good offerings.”

The project is a joint venture with NetsUnion Clearing Corporation (NUCC), a China-based firm that operates a clearing house platform for third-party payments, the report said. The JV will have to complete its preparatory work within a year, at which point it will be able to start operating in China if it receives approval.

This news comes just weeks after Beijing agreed to new rules requiring it to handle applications from US payments companies looking to operate in the country in a timely manner, the report said.

The rules, which are part of the Phase One trade deal agreement between the US and China, require the Chinese government to accept and review US electronic payments services’ applications to operate in China faster than it previously had in some cases, the report said.

While MasterCard’s JV may have been in the works for some time, gaining approval from the PBOC to move forward soon after the agreement suggests that the new rules could enable US payment firms to move into China more easily than before.

If MasterCard’s JV is able to operate in China, it’ll have the chance to compete in the country’s massive payments market — but will face significant competition from both domestic and US firms, the report said.

China’s payments market is a valuable target for MasterCard, but it’s already dominated by domestic players. China reportedly had 8.2 billion bank cards for its population of over 1.4 billion in circulation at the end of September 2019, and its third-party mobile payments transaction volume was forecast to be worth 331.4 trillion yuan (US$47.6 trillion) in 2020 by iResearch.

Both Amex and PayPal are set to start operating in China as well, so they’re also looking for ways to break into the Chinese payments market, potentially leaning on specific niches to do so.

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