Mastercard is preparing for a speedy rollout of services in the “massive economy” of China, Mastercard’s CEO said on a call with analysts Wednesday.
Mastercard, the second-largest U.S. card network, is on track to launch services in China in the first half of this year because an approval it won from the country requires services be started within six months. The Purchase, New York-based company won approval last November for a joint venture offering domestic services in China.
“We’re busy right now with our partners in China, with the banks, with acquirers, issuers and so forth to discuss rolling out on the issuing side as well as on the acceptance side,” Mastercard CEO Michael Miebach said on the call to discuss Mastercard’s fourth-quarter earnings. “For years, we have been very active in China on the cross-border side, and those are strong relationships with the same exact banks.”
Mastercard was given permission to operate in China after forming Mastercard NUCC Information Technology with NetsUnion Clearing, which is China’s national online transactions processor, according to Mastercard’s Nov. 20 press release.
Mastercard’s new services will let Chinese users tap the card in China as well as when they travel outside that country, Miebach said. “It's a massive economy and we feel we're well-positioned to serve it,” Miebach said Wednesday.
Nonetheless, he also acknowledged Mastercard isn’t the only card network offering such services. “There's another competitor that has that kind of proposition, but we do have a much better acceptance network to provide an end-to-end solution,” Miebach contended on the call.
Mastercard had been waiting on final approval for its joint venture’s activities since February 2020 when it received initial approval to set up bankcard payments processing for domestic transactions in China.
An American Express joint venture received similar approvals from the Chinese authorities in June 2020 and it has sought to expand its business in that country. But the biggest U.S. card network, Visa, has yet to gain similar permissions to do business in China despite efforts to win approval.
“The fact that we are well-positioned today with banks gives us an edge here on moving forward at speed,” Miebach said. At the same time, Mastercard likely won’t have full service at the start, he said. “Going live within the first six months doesn’t mean that we’re live everywhere,” he said. “We have to build this out over time to get the full opportunity in the medium to the long term,” Miebach said.
Mastercard’s announcement last year followed President Joe Biden meeting with the Chinese leader Xi Jinping in San Francisco. After the meeting, the White House issued a Nov. 15 statement saying the two countries would follow up “in key areas,” including related to financial issues.