Markets

American Express closer to breaking into elusive Chinese market

Key Points
  • "We have received indication from the [People's Bank of China] that they will formally accept our application," Marina Norville, spokeswoman for the New York-based credit card company, said in an email. The Wall Street Journal first reported the news about American Express' application to clear and settle bank card transactions in China.
  • The credit card firm is working with Chinese mobile payments company Lianlian through a joint venture.
  • A Lianlian spokesperson was not immediately available for comment when contacted outside of Beijing business hours. The People's Bank of China was also unavailable for comment.
American Express
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American Express is closer to becoming the first U.S. card network to offer services in China.

"We have received indication from the [People's Bank of China] that they will formally accept our application," Marina Norville, spokeswoman for the New York-based credit card company, said in an email Thursday.

The Wall Street Journal first reported the news about American Express' application to clear and settle bank card transactions in China. State-controlled UnionPay dominates the Chinese card market, which U.S. giants Visa and MasterCard have long tried to enter.

American Express is working with Chinese mobile payments company Lianlian through a joint venture. The move follows a 2012 announcement that the credit card company will license its "Serve" commerce technology to Lianlian, and make an equity investment in an overseas subsidiary of the Chinese company.

A Lianlian spokesperson was not immediately available for comment when contacted outside of Beijing business hours. The People's Bank of China was also unavailable for comment.

Chinese authorities hope to use American Express' progress as an example of Beijing opening up its markets when Trump administration advisors visit the country to negotiate on trade, the Journal said, citing people involved in China's decision making.

Shares of American Express closed 1.47 percent higher, up 0.9 percent for the year so far.

Once American Express completes the entire application process successfully, "it gets them into the market and perhaps provides them an outlet to get card acceptance through Lianlian Pay," KBW analyst Sanjay Sakhrani said in a phone interview.

However, "I don't know that it's going to be material in a very short time period," said Sakhrani, who has an outperform rating on the stock. He noted American Express' success in China depends on how much of a head start the company has versus Visa and MasterCard, and how card networks overall compete with popular mobile pay services from Alibaba and Tencent.