UnionPay's monopoly under threat as China's card market set to open

Cracks are appearing in mainland card and payment monopoly China UnionPay as the central government promises to open the market for domestic card transactions to the foreign banks and card companies that regulators have kept at arm's length for a decade.

The State Council said this week foreign firms meeting certain criteria could set up their own clearing companies, although it gave no details on a timeframe for opening the market.

Such a move would put UnionPay - owned by a consortium of mainland banks led by the central bank - at risk of losing ground to foreign firms at a time when domestic third-party payment platforms such as Alibaba Group Holding's Alipay have also nibbled away at its margins.

Foreign card companies welcomed the announcement but said there were still few details on the proposed opening of the market.

"While we are pleased with the announcement and see it as a good step in the right direction, many details remain unclear," MasterCard said.

A Visa spokesman said it welcomed the news and "looked forward to the formulation of the relevant regulation".