MA MasterCard Incorporated

By Chao Deng and Stella Yifan Xie 

BEIJING -- Mastercard Inc., after years of frustrated attempts to enter the Chinese market, is trying again by joining with a Chinese company close to the regulator in charge of approving credit card businesses.

The American card network plans to set up a joint venture with NetsUnion Clearing Corp., a clearing house for online payments more commonly known as Wanglian, according to a person familiar with the matter. The person said Mastercard will then refile its application with the People's Bank of China, which is in charge of approving card-clearing services.

Mastercard has had a separate application, with different Chinese partners, pending with the central bank for about a year. Its effort to refile with a new partner highlights the difficulties foreign companies face in gaining access to the Chinese market, despite years of promises from Beijing to let them do so.

American Express Co. won approval last year to set up card-clearing services, also as a joint venture with a domestic fintech firm instead of as a wholly-owned business.

The U.S. has tried to get China to open up its financial services sector for more than a decade, and progress has been slow. In the continuing U.S.-China trade talks, the Trump administration is again urging China to make structural changes to its economy.

Analysts aren't expecting much change, including in card-clearing services. Beijing largely ignored a World Trade Organization ruling in 2012 that China discriminated against foreign card companies. The Trump administration got Beijing to pledge anew in 2017 to grant full access to card-clearing services.

Mastercard previously applied to enter the market with Chinese partners in a consortium called Wanlian. Its year-old application languished at the central bank, according to the person familiar with the matter. The person said Mastercard decided to switch tack as it became clear regulators didn't want that partnership to move forward.

In its new proposed venture, Mastercard plans to hold a majority stake, the person said, versus 39% in the previous collaboration. AmEx and its Chinese partner have equal ownership in their approved venture.

NetsUnion, or Wanglian, was set up in 2017 by the People's Bank of China as an internet payment system for nonbanks, akin to the central bank's monopoly payment-processing system for banks, known as China UnionPay.

Authorities designed Wanglian to allow them to obtain data on all mobile transactions, which totaled more than 123 trillion yuan ($18 trillion) in the first nine months of 2018, according to research firm Analysys. The People's Bank of China and its State Administration of Foreign Exchange are the largest shareholders in the clearing house, with a combined 22% stake. China's largest payment-services platforms -- Ant Financial Services Group's Alipay and Tencent Holdings Ltd.'s WeChat Pay -- are the third and fourth largest shareholders respectively. Each owns a nearly 10% stake.

Mastercard and Wanglian have yet to sign a formal agreement, but shareholders of Wanglian recently approved the tie-up, according to the person familiar with the matter. Mastercard said in a January press release that it was in "active discussions to explore different solutions" to secure a China license.

Write to Chao Deng at Chao.Deng@wsj.com and Stella Yifan Xie at stella.xie@wsj.com

(END) Dow Jones Newswires

February 22, 2019 10:25 ET (15:25 GMT)

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