(Yicai) Oct. 13 -- US payments giant Visa has won preliminary approval to establish China's first wholly foreign-owned bank card clearing institution, paving the way for it to process domestic transactions independently of China UnionPay.

The People's Bank of China has approved Visa's application to begin preparations for the institution, the San Francisco-based company said today. Visa must complete the preparations within one year before applying for permission to start operations.

Visa is the third international card network to secure regulatory clearance to enter China's domestic clearing market, following American Express and Mastercard. But unlike its rivals, which operate through joint ventures with Chinese partners, Visa plans to enter the market on its own.

Before launching operations, Visa must secure final approval from the PBOC and the National Financial Regulatory Administration. This would allow it to clear domestic card transactions without relying on China UnionPay, the country's dominant bank card clearing network.

Founded in 2002, China UnionPay held a monopoly on bank card clearing until China began opening the sector in 2015. American Express and Mastercard subsequently obtained clearing licenses in 2020 and 2023, respectively.

"The approval of our application to prepare marks a significant step forward in Visa's long-standing commitment to China," Chief Executive Ryan McInerney said in the statement. "We look forward to taking the necessary steps in the process, pursuant to the PBOC's regulations, to begin operating domestically in China."

McInerney described China as one of the world's most advanced and dynamic digital payments markets, supported by a highly innovative ecosystem and a continued commitment to opening its financial sector.

Visa said it looks forward to contributing to the continued development of China's domestic payments market.

Editor: Emmi Laine