On October 13, 2026, Visa announced that the People’s Bank of China (PBOC) approved its “Application to Prepare” to establish a local bank card clearing business in mainland China. This marks a significant step forward after more than 40 years of operating in the market primarily through dual-branded cards with Chinese banks, under which UnionPay processes domestic transactions while Visa handles international ones. Visa CEO Ryan McInerney described the approval as “an important milestone toward the company serving China’s domestic payments market.” The company now has up to one year to complete preparatory work under PBOC regulations before applying for a full operating license. If granted, the license would allow Visa to issue renminbi-denominated cards and clear domestic yuan transactions, making it the first foreign network pursuing a wholly owned structure.
Let us explain.
A fully owned and operated domestic clearing license would give Visa direct, majority-controlled access to China’s enormous domestic payments market for the first time. Today, all domestic RMB spending runs on UnionPay rails (or QR codes). A full license would let Visa issue renminbi-denominated cards and clear those domestic transactions itself, earning interchange and processing fees on a slice of the world’s largest card market by volume. Even a modest share would be material.
Unlike American Express and Mastercard, which operate through joint ventures with Chinese partners, a wholly owned structure would let Visa set its own strategy, pricing, risk standards, technology roadmap, and profit allocation without sharing control or economics with a local partner. This is something it has never had in more than 40 years of operating there primarily through dual-branded cards.
Should a fully owned operator license be issued, this would allow Visa to compete head-to-head with UnionPay on domestic cards rather than remaining limited to cross-border and co-branded products. Being the first major foreign network with a wholly owned clearing business could create a lasting first-mover or brand advantage.
Furthermore, Direct clearing gives Visa richer data on Chinese consumer spending patterns, enabling better underwriting, fraud tools, rewards programs, and product design tailored to the market.
The 40 Year Long March.
Mainland China has maintained tight control over its financial sector, favoring domestic players and restricting cross-border capital flows; the country remains largely closed to foreign card networks on domestic rails. Consequently, Visa (foreign-issued cards) has limited direct acceptance in China. Physical card swipes/taps work mainly in tourist-oriented or high-end places, while everyday payments rely on linking the card to Alipay (see below) or WeChat Pay for QR-code payments.
For more context: Visa’s CEO became chair of the U.S.-China Business Council in June, and the announcement comes as the U.S. and Chinese president’s plan for their third meeting this year.
What About Other Card Brands?
American Express and Mastercard received earlier approvals and operate through joint ventures with Chinese partners. American Express obtained preliminary PBOC approval in 2018 and a full processing and clearing license in June 2020 via Express (Hangzhou) Technology Service Co., a joint venture with Lianlian; it was the first foreign-funded bank card clearing institution and the first to launch domestic renminbi operations. Mastercard received approval to begin preparations in February 2020 through a joint venture with NetsUnion Clearing Corp. (Mastercard NetsUnion Information Technology) and began processing domestic payments in 2024. Visa applied in May 2020. These approvals occurred under China’s gradual opening of the bankcard clearing market, first signaled around 2015. No other major U.S. card brands, such as Discover, have received equivalent domestic clearing licenses.
China Union Pay.
China UnionPay (also known as UnionPay or CUP) is a state-backed company established in 2002 under the auspices of the People’s Bank of China (PBOC). Its shareholders are primarily Chinese banks and financial institutions.
CUP is China’s dominant domestic bank-card network and the primary clearing system for renminbi (RMB) card transactions inside mainland China. UnionPay functions as the country’s bank-card association and clearing house. Most Chinese debit and credit cards carry the UnionPay brand (often co-branded with a Chinese bank), and the majority of domestic card payments, whether at POS terminals, ATMs, or online, are processed and cleared through UnionPay rails. Foreign networks such as Visa and Mastercard have historically been limited to cross-border or dual-branded transactions; domestic RMB spending has stayed on UnionPay.
According to People’s Bank of China data, the UnionPay interbank payment system processed 380.38 billion transactions totaling RMB 279.41 trillion in 2025. That works out to 1.04 billion transactions per day worth about RMB 766 billion daily.
China’s overall bank-card market (overwhelmingly UnionPay) oversaw transaction value of RMB 963.6 trillion (about USD 144 trillion) in 2025. The country had more than 10 billion bank cards in circulation by the end of 2025.
The Big Leap Forward: AliPay
On January 5, 2025, we wrote “Alipay is the leading digital payment platform in China, known for standardizing the use of QR codes at merchants and mobile payments by consumers. Let us explain.
Hard to imagine, but a generation ago China was a cash-based society. All at once, an edict from the top assigned consumers a bank account, a debit card and required businesses to pay their employees electronically. Chaos ensued. Citizens didn’t believe they had actually been paid because they couldn’t see and hold the money. Further, no one knew what a debit card was, there were not enough ATMs to service the sudden crush of demand, and those mechanisms (made by western manufacturers) would either break down or run out of cash so frequently that the underdeveloped support infrastructure couldn’t keep up. It literally became a 24/7 problem in metropolitan areas). What’s more, adoption was extremely slow for merchants. Small and medium sized retailers were in no rush to install point-of-sale (PoS) equipment due to lack of familiarity, counter space, and incremental cost.
Enter Jack Ma, Co-Founder of Alibaba Group – Better to ask for forgiveness than permission.
AliPay was originally designed as a payment platform to enable the purchase of e-commerce goods and services for Alibaba (a very large Chinese e-commerce company). AliPay extended its payment services to the physical world with small and medium sized retailers by leveraging the consumer’s mobile phone, and similarly the merchant’s mobile phone or tablet. This cheap, easily accessible, all-inclusive approach to service the hard-to-reach and greenfield (cash based) SMB marketplace jump-started the adoption of electronic payments in China. AliPay bypassed China Union Pay (CUP; the government’s nationwide payment system) and didn’t need a debit card or PoS device to do it. All one needed was an AliPay account. Adoption was so explosive and generated so much volume in such a short period of time, CUP’s domestic TAM was greatly reduced.
AliPay is accepted at 90% of China’s retailers in medium and large cities, 50% overall share in the country (WePay is its biggest competitor, primarily in rural areas). Over 700 million consumers and 70 million retailers utilize AliPay in China which generates an astonishing gross payment volume (GPV) of over $10 trillion from 50 billion transactions per year (for comparison these are Visa type numbers). Also noteworthy, its merchant discount rate (MDR; the cost to the retailer to accept electronic payments) is well under 1%. This is in contrast to the US where the SMB is charged the highest MDR of any merchant class, frequently 2.5% to 3.5%, sometimes more. The brainchild of its founder, Jack Ma, today AliPay operates as a unit of Ant Group, which is one third owned by Alibaba and a series of Chinese based institutional investors. We view AliPay as a remarkable success story which we think is worthy of discussion.”
