The World Trade Organisation (WTO) has ruledthat China’s
domestic cards processing industry is a monopoly, discriminating
against foreign credit and debit networks.

The ruling could enable foreign companies to
break into estimated $1tn payments processing market.

The decision was welcomed by the US
governments who first filed a complaint in 2010, backing Visa Inc,
MasterCard and a number of other US-based companies in their
efforts to gain greater access into the Chinese market.

When China joined the World Trade Organisation
in 2001, it signed an agreement to open up its borders to foreign
competition and agreed to allow foreign payments processors to
enter the Chinese market. But while China UnionPay remains the only
company allowed to process domestic yuan transactions in the
country, the Chinese network has been able to expand its own
international acceptance network, and has experienced significant
growth.

“We are hopeful that this ruling will pave the
way for international payment companies to participate in the
domestic payments marketplace in China,” Visa Inc said in a
statement.

Tim Reif of the US Trade Representative’s
office said the ruling would support about 6,000 jobs if it goes
through.

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The WTO, however, rejected US claim that China
UnionPay was an “across-the-board monopoly supplier”, making it
clear that its ruling only applied to local currency transactions
through payment cards issued in China.

Currently, international networks are able to
issue co-brand cards with China UnionPay, but Cards International
reported last year that Visa had to take steps to prevent the
Chinese network from processing non-domestic transactions.