China will open up its market for clearing domestic bank card transactions, the cabinet said on Wednesday, in a move that could benefit companies such as Visa and Mastercard, in a booming market worth over $1 trillion a year.
Access for foreign firms to China's fast-growing electronic payments market is a controversial issue.
China promised to reform and free its electronic payments market after the World Trade Organisation (WTO) said in 2012 that its behavior discriminated against U.S. firms.
Wednesday's announcement by the State Council followed a weekly meeting. Foreign firms that meet its criteria could set up their own clearing companies, it added, but gave no further details.
It was not immediately clear if the move would allow foreign firms to process credit and debit card payments made in yuan in China.
Visa, the world's largest credit and debit card company, welcomed the move.
"We look forward to seeing the specific details and working with people within China to figure out what we need to do to participate in that marketplace, where we believe we can add a lot of value," Chief Executive Charlie Scharf said on a conference call, following the release of its fourth-quarter earnings.
In July 2012, the world trade body held that China had discriminated against U.S. bank card suppliers in its electronic payments market by favoring state behemoth China UnionPay, following a complaint to the WTO by the United States.