Visa Says PBOC Approved Preparation for China Card Clearing Business

Visa (NYSE: V), the global card payments network, said today that the People’s Bank of China (PBOC) has approved its application to begin preparing a domestic bank card clearing business. By Visa’s account, it does not yet let Visa clear payments inside China.

The shares closed yesterday at $389.27, up 0.99% from Friday’s $385.45 and an eighth straight daily gain. That is the highest close of the past three months, 7.9% above the close on the 2nd of October, so the rally predates the announcement. The first US trading reaction comes at today’s open.

Visa said the PBOC approved its Application to Prepare, the first stage of the central bank’s process, which allows setup work on a bank card clearing institution. That is a licensed domestic firm that settles card payments between banks inside China.

The approval of our Application to Prepare marks a significant step forward in Visa’s long-standing commitment to China.

Ryan McInerney, CEO, Visa

Visa said it must still complete the process before it can begin operating domestically. It applied in May 2020, so the approval took about six years.

The path is established. American Express received its licence in June 2020 after a 2018 PBOC nod, while Mastercard’s China joint venture began processing in 2024, about four years after its February 2020 preparation approval.

The timing is notable, with the US and Chinese presidents due to meet for a third time this year next month and Visa’s chief executive having chaired the US-China Business Council since June.

The prize is uncertain. Visa already works with Chinese banks on dual-branded cards, where UnionPay, the domestic network, handles domestic transactions and Visa handles overseas ones. Mobile wallets from Tencent and Ant dominate everyday payments there. The size of the China opportunity is not known, so this is a long-dated option rather than a near-term earnings driver.