U.S. Credit Card Companies Blockade in Beijing Almost Ends

Banking CIO Outlook | Wednesday, April 03, 2019

Strict attention to the financial bottom line is required in any enterprise. The difference between success and failure is often in the reduction of costs and financial know-how. That’s where businesses credit cards play an important role. Business credit cards provide necessary credit while offering perks, and benefits as a reward for hard work. Just charging the expenses for travel, client dinners, inventory, and more to the business credit card is an excellent way to manage monthly cash flow and watch expenses.

Active in more than 130 countries, American Express (AMEX) is the world’s largest transaction issuer of credit cards, averaging six billion transactions a year. American Express accepts mainly high-income cardholders with strong credit scores. Late last year, the company was awarded a long-awaited prize by Chinese regulators by allowing the establishment of a payment card network in one of the world’s largest markets.

During the years, China has blocked Western companies, domestic competitors such as China UnionPay, Alipay, and WeChat Pay that have built up the electronic payment market and established strong ties with consumers. According to the U.S. Commerce Chamber, Union Pay today operates the world’s largest card network with seven billion credit, debit, and, prepayment cards.

One of the frustrations that led President Trump to engage in a trade war with Beijing is China's policy of blocking many foreign industries from its market for more than a decade. Beijing keeps them at the inlet by denying them operating licenses, adopting a regulation that favors domestic competitors and forcing them to work with a Chinese partner, according to Western business leaders.

Meanwhile, domestic payment options have been pulled out. Many Chinese in the middle class say that they are happy to swap their phones at checkout counters, with WeChat or Alipay apps debiting their bank accounts directly without charges. Fritz Quinn, the company’s vice president of corporate affairs in Asia, expects that, after establishing a network of Chinese banks to issue American Express cards, and retailers to accept them, the company must have a final license.

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