China has given permission to Citigroup Inc. to issue credit cards within the communist country, a move which comes amid a probe by the World Trade Organization on the legality of Chinese restrictions on allowing foreign companies to process transactions.
Citigroup will be the first western bank to infiltrate China, and only the second along side Hong Kong based Bank of East Asia which first entered the Chinese market in 2008.
Currently, banks that wish to process within the country must co-brand with operators in the country and issue the cards in yuan. Instead of being processed through American companies like Visa or Mastercard, all transactions will go through UnionPay, which is based in Beijing.
The move is hoped to open the door for other banks to get their foot into China’s booming economy.
Credit card usage has surged recently among China’s 1.3 billion citizens, with a 20 percent increase from 2010 to 2011.
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