American Express (AXP) has announced that its joint-venture in mainland China has received approval from the People’s Bank of China (PBOC) for a network clearing license.
This makes American Express the first foreign payments network to be licensed to clear RMB transactions in mainland China. The company expects to begin processing transactions later this year.
“We look forward to welcoming millions of new consumers, businesses and merchants in China to American Express, as well as continuing to enhance our support for our global customers when they travel to the region” AXP commented.
Express (Hangzhou) Technology Services Company Ltd is American Express’ joint venture with Lianlian DigiTech Co., Ltd, a Chinese fintech services company. The new joint venture has already built a network to clear domestic transactions charged on American Express cards, and is also compatible with the key mobile wallet players in China.
“We are pleased to be the first foreign company to receive this license. This approval represents an important step forward in our long-term growth strategy and is an historic moment, not only for American Express but for the continued growth and development of the payments industry in mainland China,” cheered Stephen J. Squeri, CEO of American Express.
Shares in AXP have plunged 18% year-to-date, and analysts have a cautiously optimistic Moderate Buy consensus on AXP’s outlook. This is made up of 8 recent buy ratings, 8 hold ratings and 1 sell rating. Meanwhile the average analyst price target of $102 is in-line with the current share price. (See American Express stock analysis on TipRanks).
RBC Capital analyst Jon Arfstrom has a hold rating on the stock but recently bumped up his price target from $85 to $105. “Overall billings activity remains depressed from softer global travel, though non-T&E (travel and expense) spending is gradually improving” he explained, adding that non-T&E activity should continue to accelerate through June.
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