American Express Cleared to Process Local Payments in China

American Express was cleared to begin processing local transactions in China and will begin doing so later this year.
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American Express  (AXP) - Get Report said it had become the first foreign payments network to be granted a clearing license in mainland China.

Shares of the New York credit card company at last check were down 0.9% to $100.80.

American Express said its joint venture in mainland China, Express Hangzhou Technology Services Co., received approval from the People’s Bank of China for a network clearing license. 

Express Hangzhou is American Express’s joint venture with Lianlian DigiTech Co., a Chinese financial-services company.

American Express said it expected to begin processing local transactions later this year.

Express Hangzhou has built a network to clear domestic transactions charged on American Express branded cards, the company said, and is also compatible with the key mobile wallet players in China.

"We look forward to welcoming millions of new consumers, businesses and merchants in China to American Express, as well as continuing to enhance our support for our global customers when they travel to the region," Stephen Squeri, chairman and CEO of American Express, said in a statement.

China had 8.5 billion bank cards in circulation at the end of September 2019, with over 90% of them debit cards. 

Mobile transactions topped 190 trillion yuan, or $27 trillion, in China in 2018, making it the world’s largest such market, according to iResearch. 

In February Mastercard  (MA) - Get Report won initial approval to set up its bank card clearing business in China.

The opening to card companies is part of a broader plan by China to give access to its markets, which also include insurance, asset management and investment banking, according to the South China Morning Post. 

Last year, the People's Bank of China approved PayPal's  (PYPL) - Get Report acquisition of a 70% equity state in Guofubao Information Technology Co. 

In April, American Express posted stronger-than-expected first-quarter earnings Friday but set aside $2.6 billion to cover bad loans and card defaults amid the coronavirus pandemic.