Foreign bank card companies may face stricter regulations in China, which could affect their expansion plans in the nation, Reuters reported on Tuesday, citing unidentified insiders.
The Chinese government will require foreign companies that issue bank cards such as Visa Inc and MasterCard Inc, both based in the U.S., to cooperate with domestic companies before they can obtain a license in China, Reuters said, citing Jeremie Waterman, the head of the American Chamber of Commerce in Greater China.
Such a move would reduce these companies' control over their businesses and reduce their rewards, according to Reuters.
However, "it is unlikely for the Chinese government to launch such restrictive policies," Li Jian, a researcher at the Chinese Academy of International Trade and Economic Cooperation, an institution under the Ministry of Commerce, told the Global Times on Tuesday.
Both Visa and MasterCard have expanded their business in China for many years, said Li. "It is not so easy to suspend their business suddenly."
The People's Bank of China, the central bank, oversees yuan transaction processing and the nation's fund clearing systems.
The bank didn't immediately reply to an inquiry from the Global Times about the news as of press time.
Li said that if the report does turn out to be true, it will deal a heavy blow to foreign bank card issuers' business in China.
China will become the world's largest bank card market by 2020, and by 2024, the card payments in the market will hit $42 trillion, according to Reuters.
There were 59.57 billion bank card transactions in China in 2014, involving 449.9 trillion yuan ($70.81 trillion), the Xinhua News Agency reported on April 22.
Reuters, citing critics, said that the purported move was intended to protect China UnionPay, a State-owned specialized institution for operating yuan transaction processing and fund clearing systems.
There were about 5 billion UnionPay--enabled bank cards in 2014 in China, according to Xinhua.
But Li said that UnionPay's growth is not based on government protection.
"Security and convenience are the fundamental factors that allow UnionPay to gain users," Li noted.
