Innovations in Identity

China Opens its Gates to Foreign Payments Players

 

China UnionPay

In a recent announcement that has generated tremendous excitement within the international payments community, the Chinese government issued new rules that effectively open the gates to the country’s payment transaction market to foreign companies. As of June 1, 2015, bank card-clearing companies based outside of China will be able to submit an application to the central bank, ending the monopoly currently held by China UnionPay, the state-controlled bank card organization.

China’s payments market is huge, with spending from bank card consumer transactions totaling $6.84 trillion in 2014. This is good news for MasterCard and Visa, the world’s two largest credit and debit card issuers, as they currently must rely on China UnionPay and pay network access fees to process payments within China. Not surprisingly, news of the end of the state monopoly sent stock prices for both card issuers soaring as a result.

What has brought about this seemingly sudden change?

Like most changes in China, this particular policy change took some time to come about. In 2012, the World Trade Organization (WTO) ruled against China in a trade dispute between the U.S. and China. Towards the end of October 2014, the State Council made a statement saying that it would open the bank card-clearing business to domestic and foreign investors for the first time. However, at the time, it did not set a date as to when that would actually happen. It was not until this week that a clear decision was finally made.

According to the new rules published by the State Council, foreign firms must set up local clearing company in China and apply to the central bank for a license. In addition, a license is not required for overseas companies that process only foreign-currency, cross-border transactions, but they will have to register with Chinese banking regulators. As a result of this momentous change, China’s card payment processing market will be fair and competitive, which should mean better service and lower transaction fees and prices, benefitting merchants and consumers alike.

Are you ready for this major opportunity to gain a foothold in an industry that handles $73 trillion a year?

When entering any new market, it’s important to ensure that your business is protected from fraud, especially when it comes to payments. Online identity verification (IDV) can prepare you for success in China. By using online IDV, not only can your business prevent fraud, but it can also build trust and confidence with your customers.

As a global leader in identity verification, Trulioo’s GlobalGateway is the only solution that provides instant online IDV for China, using legitimate data sources to help businesses verify the identities of Chinese citizens. Trulioo works with leading data source providers who internally enforce the highest data privacy and industry compliance standards. From the vetting process to onboarding, rigorous checks are in place including determining business history, as well as executing security compliance checks to ensure the integrity of our data. With flexible integration options, including open API, XML Direct and a web-based portal interface, GlobalGateway works seamlessly with existing systems and performs native language IDV using information provided by customers from their Chinese Resident Identity Card.

Disclaimer: Trulioo provides no warranty that the information contained in this document is accurate, up to date or complete and in no circumstance does such information constitute legal advice. Any person who intends to rely upon or use the information contained herein in any way is solely responsible for independently verifying the information and obtaining independent expert advice if required.

No Comments
Post a Comment