US payments companies continue to be shut out of China

• Key insight: The Chinese government’s decades of resistance to allowing U.S. payments networks to compete in China have created an effectively closed market. Recent overtures to Visa don’t change that.
• Forward look: The People’s Republic of China’s 25-year stall has made a mockery of its WTO commitment. Washington and Visa have no reason to take its latest gesture seriously.

Visa recently received approval from the People’s Bank of China, or PBOC, to “begin formal preparations to establish a domestic bankcard clearing institution.” Visa hailed it as “a milestone.” Credulous media and analysts reported this as progress. It’s a milestone on the road to nowhere.

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Mainland China’s payments market remains de facto closed.

For a quarter of a century, Visa and China have pretended that the world’s largest retail payment network had a real opportunity to serve China’s domestic payments market — Visa because it’s a gigantic market and China because it wanted to maintain the fiction it was open.

Visa has had a toehold in the People’s Republic of China since 1987 when the state-owned Bank of China joined the global bank card association. However, in the subsequent four decades there hasn’t been a single domestic Visa transaction in mainland China. Visa’s Sino-opportunity has been limited to transactions with one leg outside China: Chinese paying for goods and services abroad, and foreigners paying for goods and services in or sending money to China. Chinese, however, can’t use Visa to pay Chinese merchants.

In 2001, as part of its accession to the WTO, the PRC committed to completely open its domestic payments market by 2006. This was under paramount leader and, in the China context, relative liberalizer Jiang Zemin who continued Deng Xiaoping’s strategy of “Hide your strength, bide your time,” while strengthening China by economic reform and opening up to the world. When Beijing made its WTO commitment, the Middle Kingdom’s current payments colossi didn’t yet exist. Card network China UnionPay, or CUP, and mobile payments phenoms Alipay and WeChat Pay were launched in 2002, 2009, and 2013, respectively.

By 2006, no foreign network had processed a payment in mainland China.

In 2010, in the face of the PRC’s flagrantly flouting its commitment, the U.S. filed a WTO complaint. In 2012, the U.S. substantially prevailed and Beijing said that it wouldn’t appeal.

Beijing slow-walked the rollout of the application process for foreign payment networks.

In 2013, Beijing declared it was implementing its commitment.

In October 2014, China’s State Council made an announcement signaling that foreign firms like Visa could apply to p rocess domestic bank card transactions. It formalized the decree in April 2015, providing separate stages for preparatory and operational license applications. In June 2016, the PBOC and the China Banking Regulatory Commission detailed ownership structure, security, local data-storage, and clearing standards requirements.

On June 30, 2017, the PBOC opened its formal application process. The following month Visa applied. True to form, the central bank dragged out the review process.

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American Express formed a 50-50 joint venture with Chinese fintech LianLian Group, aligning with Beijing’s preference for local partners. It applied later in 2017. Amex’s joint venture was ultimately granted preparatory approval in November 2018 and a final operating license in June 2020. It started clearing domestic payments later in 2020. In a two-step process from December 2024 to June 2025, Amex took control of the joint venture, diluting LianLian down to 17.65%.

Mastercard considered applying both as a wholly foreign-owned enterprise and with local partners. In March 2019, it established a joint venture with NetsUnion Clearing Corporation — a clearing entity controlled by the central bank and Chinese state-owned banks — and submitted a formal application. The PBOC approved its preparatory application in February 2020 and granted final operational approval in November 2023. Mastercard processed its first domestic Chinese transaction in 2024.

Nevertheless, American Express and Mastercard remain largely irrelevant in China’s enormous domestic market.

The path for the world’s largest card network has been more difficult.

Visa’s initial preparatory application in July 2017 was as a wholly owned subsidiary — Visa Information Technology (China) Co., Ltd. For three years, the PBOC declined to formally acknowledge the application. In May 2020, following the U.S.-China Phase One Economic and Trade Agreement, the PBOC at long last formally logged Visa’s resubmitted application, yet left it in limbo for another six years.

After its nine-year pocket veto, the PBOC’s October 2026 limited green light for Visa is intended as a public gesture as part of the PRC’s ongoing trade negotiations with the Trump administration. Even if Beijing made it in good faith and intended to let Visa compete on a level playing field — a premise that strains credulity given the last quarter of a century — the world’s leading card network would start at an immense competitive disadvantage. The Middle Kingdom’s three domestic payments giants have enormous network mass, work well, and are habit for consumers and merchants.

In 2024, the 9.9 billion CUP cards issued by Chinese banks were nearly universally accepted across the country. In 2026, Alipay and WeChat Pay each had more than 900 million active monthly users and enjoyed near ubiquitous acceptance online and at the physical point of sale. In contrast, Visa’s acceptance in China is paltry, principally serving international travelers and e-merchants selling abroad. Moreover, China’s largest card issuers are state-owned banks. Notionally private-sector banks too must be mindful of Beijing’s preferences, which decidedly don’t include seeing an American payments giant scale in China.

Compared with 2001, China’s economy and military budget are roughly 13 times larger today. Under Xi Jinping’s increasingly centralized and nationalistic leadership, China is no longer hiding its strength and biding its time. It’s flexing its might and is an open foe of America.

The PRC’s 25-year stall has made a mockery of its WTO commitment. Washington and Visa have no reason to take its latest gesture seriously. Beijing is not going to permit U.S. payment networks to play a critical role in its domestic payment system.