A Mastercard logo is seen on a credit card. File Photo: VCG

A reported attempt by Mastercard to form a joint venture (JV) with Chinese online payment clearing house NetsUnion Clearing Corp (NUCC) is in line with China's opening-up effort in the financial market, analysts said.

NUCC approved a plan on Friday establishing a JV with global payment and technology giant Mastercard, as reported by Caixin, which cited unidentified sources. 

Mastercard will take control, owning 51 percent of the new JV, which has 1 billion yuan ($149 million) in registered capital. The company will refile an application for a bankcard transaction clearing license with the People's Bank of China (PBC), China's central bank, according to Caixin.

If the plan goes through, it probably will channel more competition into the online payment clearing market, and potentially mean better services for Chinese people, Dong Ximiao, a senior researcher at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Sunday. 

"Chinese people will have more options and the country's regulatory body will be happy to see new blood in the market," Dong added.

The new JV may pose challenges to UnionPay, China's bankcard network operator, which once dominated the country's clearing market. Even before China announced a decision to open the bankcard clearing market in October 2014, UnionPay's payment business was already being squeezed by fast rising online payment platforms such as Alibaba's Alipay and Tencent's TenPay. 

In November 2018, the PBC approved Express (Hangzhou) Technology Service Co - a JV launched by one of Mastercard's rivals, American Express Co and a Chinese fintech company, Zhejiang Lianlian Group with a 50-50 stake - to set up a bankcard network.

Forming a JV is likely to be the most cost-efficient option for Mastercard. The US card network's path to China's enormous clearing market has been rocky. It submitted application materials in 2017 with the PBC but ended up withdrawing that application in June 2018, according to the Economic Information Daily. 

It is a good thing for Mastercard to form a JV with NUCC, whose largest shareholder is the PBC, according to data research platform tianyancha.com. But there is a potential catch. 

"Credit card processing fees are significantly lower in China than in the US," Dong said. "The new JV will need to face this situation in China." 

So far, Global Times has received no comment from Mastercard regarding the reported JV. 

But the report demonstrates that China has kept its promise on opening-up by taking action, allowing foreign companies to enter China's bankcard clearing market.