BEIJING—American Express Co. cleared a hurdle in its yearslong effort to operate in China, potentially becoming the first U.S. card network to receive permission to offer services in the Chinese market.
China’s central bank informed the New York-based card issuer that it would “formally accept” its application to clear and settle domestic bank-card transactions, an AmEx AXP, +0.32% spokesman said. The firm has applied to do so by forming a joint venture with a Chinese mobile-payment provider, Lianlian Group, the spokesman said. The People’s Bank of China confirmed Thursday it has accepted AmEx’s application.
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Obtaining such regulatory consent marks an important, if only an initial step toward gaining a foothold in China’s fast-growing electronic-payment market. Chinese authorities hope to tout AmEx’s application as an example of progress in opening its markets when President Donald Trump’s top economic advisers travel to Beijing next week to try to settle escalating trade disputes, according to people involved in China’s decision-making.
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AmEx’s decision to take on a Chinese partner—instead of forming a wholly owned entity—shows the difficulties foreign firms face in going solo in a market where the government holds sway, said analysts and industry experts. Barriers to foreigners have been high for so long that Chinese institutions now thoroughly dominate many sectors, especially in finance—be they for payment services, credit rating, brokerages or banking—sectors where China has said greater foreign participation would be allowed.
An expanded version of this report appears on WSJ.com.
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