(Yicai) May 10 -- The Chinese joint venture of MasterCard and NetsUnion Clearing Corporation, a clearinghouse platform backed by China's central bank, has begun processing payments made on the Chinese mainland with the US bank card clearing giant's cards issued by the country's banks.

MasterCard NetsUnion Information Technology Beijing will initiate and operate the bank card clearing business regarding MasterCard cards in the Chinese mainland, the New York-based firm announced on May 8. The cards will be accepted for domestic and international purchases, it noted, adding that the JV will also explore serving as an acquirer.

On Nov. 17, the People's Bank of China issued a bank card clearing business license to MasterCard NetsUnion, making MasterCard the second overseas bank card clearing institution to enter the Chinese market after American Express in 2020. The JV is the third such institution established on the Chinese mainland.

"Since entering the market nearly 40 years ago, we (MasterCard) have built strong relationships with China's banks, merchants, and fintechs to connect its people to the global economy," said Chief Executive Michael Miebach. "With our local partner NUCC, our goal is to simplify the payment experience for China's MasterCard cardholders both at home and overseas."

More than 10 Chinese banks launched over 30 MasterCard bank card products on the day MasterCard NetsUnion started operations, Yicai found. Bank of China has offered four types of cards that can be used in the Chinese mainland and overseas regions to its high-end clients. 

MasterCard NetsUnion will also collaborate with several acquiring banks and payment institutions to set up all-channel networks for acquiring in the Chinese mainland to provide cardholders with a swift and secure payment experience in China and abroad.

NUCC, the PBOC, China's State Administration of Foreign Exchange, and major Chinese online payment giants directly or indirectly own stakes in MasterCard NetsUnion. MasterCard Asia/Pacific and its associated firms own 51 percent of the JV.

MasterCard NetsUnion will provide domestic consumers with multi-layered and differentiated payment services, said Guan Tao, global chief economist at BOC International Holdings. This will help align China's financial sector with international standards and improve domestic financial institutions' marketization and internationalization, Guan added.

The launch of MasterCard NetsUnion services is a significant event for the Chinese payment and clearing market, noted Yang Tao, director of the Research Center of Payment & Settlement under the Chinese Academy of Social Sciences' finance and banking institute.

The introduction of an overseas clearing organization will optimize the pricing mechanism of Chinese payment services, Yang pointed out. This will drive the retailing and payment supply chain to constantly improve service efficiency to offer more convenience in cross-border payment to offshore visitors of the Chinese mainland and satisfy the increasingly diversified payment demand of consumers and companies, Yang said.

Editors: Tang Shihua, Martin Kadiev