What’s new: U.S. credit card giant American Express Co. increased its investment for a majority stake in a clearinghouse joint venture in China, tapping further into the business backed by the trillions of dollars in card transactions made in the country each year.
The People’s Bank of China (PBOC) has approved Express (Hangzhou) Technology Services Co. Ltd. to increase its registered capital by nearly 14% from 5.06 billion yuan to 5.76 billion yuan ($709 million – $807 million), according to the central bank’s website.
Express Technology is a 50-50 joint venture set up in 2017 by American Express and Chinese fintech company Lianlian DigiTech Co. Ltd.
Following the capital increase, American Express’ holding in the venture rose to 54.8%, with the Chinese partner’s share dropping to 45.2%, according to industry data provider qcc.com.
In 2022, China’s bank card transactions totaled 1.01 quadrillion yuan ($141 trillion), according to PBOC data. But the market has seen narrowing margins due to rising competition and declining service fees.
The context: Express Technology is one of the three bank card clearing service providers operating in China, along with state-owned UnionPay and Mastercard NUCC Information Technology (Beijing) Co. Ltd., a joint venture between Mastercard Inc. and NetsUnion Clearing Corp. (NUCC).
In 2020, Express Technology became the first Chinese-foreign joint venture clearinghouse to win a license to run a yuan-denominated bank card clearing service in China. Mastercard NUCC won the license last month.
Since its establishment, Express Technology has increased its registered capital three times from the initial 1 billion yuan to the latest 5.76 billion yuan ($140 million – $800 million). The company has offered over 100 yuan-dominated bank card products and forged partnerships with all major third-party payment providers. However, the company has been operating in the red for the past three years, Caixin learned.
Contact reporter Han Wei (weihan@caixin.com)
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