American Express Is the First Foreign Payment Network to Receive Clearing License Approval in China

If you have been to China, you will definitely notice the prolific use of Alipay and WeChat Pay. While cash is still accepted in most places, it is generally expected of consumers that they will use some kind of mobile payment. Credit cards are generally less popular and many businesses struggle with accepting those that are issued externally (not within China). American Express has finally received approval for a clearing license in China and it is now the first official foreign payment network to process local currency transactions in one of the world's largest markets - an estimated USD 27 Trillion Market!

Last year, I wrote about how foreigners can use Alipay and WeChat Pay with an international credit card. With the approval to start bank card clearing services in China, American Express will cooperate with leading Chinese mobile wallet service providers to process both online and offline payment transactions. Currently, the American Express network only processes foreign-currency payments outside of the country (payment gateway located outside of China) and while some high-end properties and venues do accept American Express cards, local-currency transactions are typically cleared by China UnionPay Co.

As part of phase one U.S. trade deal that was signed earlier this year, China is committed to provide access to its market for card companies. Most cards issued domestically are by China UnionPay Co and other payment networks like mastercard and Visa are still trying to break into this trillion-dollar market. It will certainly be interesting how this pans out for American Express - there is obviously a huge demand for premium lifestyle cards like Centurion and Platinum charge cards in the market but it goes without saying that the company has plenty of challenges ahead since WeChat Pay and Alipay (which extend beyond just payments) are already integral to the daily lives of people.