PBOC lets Visa follow American Express and Mastercard into domestic yuan clearing

We think the approval widens who may settle domestic yuan card payments on Visa's own network ^[3], and that it is early to call it the end of UnionPay's lead. The sources put UnionPay's dominance in the past tense ^[8]. The reports do not include a volume, fee or market-share figure for UnionPay, American Express or Mastercard, so the size of any shift cannot be computed from what has been published.

Either Visa takes meaningful volume once it launches, or Visa holds the permission and the volume stays small (a clearing licence is a permission, and it earns nothing until transactions clear), or the preparation year runs long.

Evidence against our view would be reported yuan volume at the American Express or Mastercard ventures large enough to show that a licence converts into share, or a Visa launch well inside the year. The window itself closes around mid-October next year ^[10]. The two earlier licences came three years apart ^[12].

The other open item is whether Visa has a partner. American Express and Mastercard entered through joint ventures ^[11]. The reports on Visa describe a locally registered clearing organisation ^[1].

Visa's chief executive put the remaining work in his own words. "We look forward to taking the necessary steps in the process, pursuant to the PBOC's regulations, to begin operating domestically in China," Ryan McInerney said in a press release ^[6].

The announcement came weeks after Xi Jinping's trip to the United States ^[4]. If Visa's application was part of the financial-services consensus reached in the run-up, other American institutions have a template; if it was not, the timing is coincidence and the approval rests on the PBOC's own process.