American Express Co on Friday won approval to clear card payments in China, making it the first US card network to gain direct access to what is set to be the biggest bank-card market by 2020.

The move comes months after Beijing started allowing foreign companies to apply for licenses and ahead of a G20 meeting in Argentina where the United States and China will try to resolve their trade disputes.

The preliminary approval allows the company to process and settle payments in yuan domestically by setting up its own network with its Chinese joint venture partner LianLian Group.

Rivals Visa and Mastercard have also submitted requests for licenses but are yet to get approval

AmEx's JV, named Express (Hangzhou) Technology Services Co, is required to complete operation preparations within a year and get a nod from the central bank before running the card clearing business, the People's Bank of China said in a statement on its website.

The approval is a "significant step toward opening up China's bank card market to foreign investors", the central bank said, adding that it would continue to ease in an orderly way market access for clearing and settlement institutions.

Until now, foreign card companies have had to partner with China's UnionPay, a state-controlled consortium that enjoyed a monopoly on all yuan payment cards issued and used in the country, for access to the country's payments network.

Foreign card companies, especially behemoths like Visa and Mastercard, have been lobbying for more than a decade for direct access to China - where the number of cards in circulation is expected to rise to 9 billion by 2020 from 6 billion in 2016, according to research firm GlobalData Plc.

UnionPay counts Visa, Mastercard, and Apple Inc among its partners for payments-related services in China.

Visa was the first to submit its application for a license in July 2017, but its request was put on hold and the company was asked to firm up its local equity partnership before resubmitting its application, sources told Reuters last year.

Reuters