(Yicai Global) Nov. 12 -- New York-based financial firm American Express has gotten the green light as the first foreign credit card provider to settle payments in the Chinese yuan, which may ease Amex card owners' cross-border transactions.

The People's Bank of China and China Banking Regulatory Commission approved an application from Express Hangzhou Technology Services, Amex's joint venture with Chinese partner LianLian Group, to build a clearing network in China, the PBOC said on its website on Nov. 9.

Foreign entrants to the Chinese market may pursue cross-border payment services to meet the demand from domestic and overseas clients, Yang Tao, a financial research director at the Chinese Academy of Social Sciences. The first consumers may get their Chinese Amex cards as early as in one year.

China will become the world's largest bank card market by 2020, as the number of circulating bank cards may increase to 9 billion, public information shows. UnionPay, a state-backed credit card provider, dominates 90 percent of the more than 7 billion card owners' market.

The approval "signals a substantial open-up of China's clearing sector that has always been dominated by domestic capital," said Ling Tang, the senior vice president of financial firm Lakala Payment.

Amex's market entrance will help to improve the competitiveness and efficiency of bank card services and it will also offer more diversified payment services to consumers, said Yang.

Domestic bank card charges are generally less than those of international ones, said Ximiao Dong, a financial researcher at the Renmin University of China, adding that those margins are not likely to get lower despite competition.

"Domestic banks panicked when foreign banks entered China, but the Chinese bank market is still dominated by domestic banks," Tang said. Getting an approval is just the beginning, what happens after it is key, Tang said. Amex will face a series of problems in the coming year, he added.

Editor: Emmi Laine