Call it the great payments wall of China.

As the country's payments volume has grown to account for more than a quarter of the world market, U.S. networks have been stuck at the border, allowed only to host foreign-currency transactions and ceding all domestic payments to China UnionPay Ltd., the only national payments network.

"The potential of the Chinese market is immense," said Olann Kerrison, the head of publishing for the London research and publishing firm Lafferty Group. But outside payments networks have "been reduced to a role of standing by and watching because of the government regulations that give China UnionPay a monopoly on processing [domestic currency]-based transactions."

According to a July report from Lafferty Group, China had 1.5 billion debit and credit cards in circulation at the end of 2007, with a total billed volume that year of $4.54 trillion, including point of sale transactions and cash withdrawals. The country accounted for 27% of global payment card billed volume in 2007.

Outside networks, unable to touch the internal transactions in that percentage, have focused on increasing their merchant acceptance in China and their cross-border transactions — that is, payments made either by foreign tourists entering the country with outside cards or by Chinese who travel abroad with cards that are often cobranded with China UnionPay and another network.

More governmental openness may be ahead. Last month China Knowledge Holdings Pte Ltd., a news service based in Singapore, reported that Visa Inc. was exploring a joint venture with China UnionPay, and that MasterCard Inc. might do the same. While those U.S. networks would not confirm or deny the report, their executives expressed hope for increased cross-border transactions and, eventually, a loosening of China UnionPay's domestic monopoly.

"I think the government is in a fairly open and kind of flexible mode to change some of their restrictions here," said Willie Fung, MasterCard's general manager for greater China. "I believe in the very near future they will really open up all the categories for fair competition."

Similarly, Richard Chang, an executive vice president and the general manager of greater China and the Philippines for Visa, said, "China clearly is on the path to open its market in all kinds of industries."

Network executives have acknowledged the roadblocks.

In a May meeting with MasterCard shareholders, Walt M. Macnee, the Purchase, N.Y., company's president of global payments, called China UnionPay's dominance in China a "fact of life. … It does, I think, impede some innovation, some progress, but … over time, innovation and creativity will prevail."

Nevertheless, speculation about a joint venture with China UnionPay has been fueled in part by the question of what the now-public Visa and MasterCard intend to do with all the cash they have more or less at their fingertips.

Philip J. Philliou, a partner at the payment consulting firm Philliou Selwanes Partners LLC, said that either a joint venture with China UnionPay or an outright acquisition of the domestic network would be a logical next step.

"In a Visa-MasterCard post-IPO world, they both have generated billions of dollars. What are they doing with the money? To date nobody's done any big acquisitions," he said.

China UnionPay has forged several reciprocal acceptance agreements with other networks, including one with Discover Financial Services. That agreement, signed in 2005, means that Discover's cards are accepted virtually everywhere that takes plastic in the country (approximately 740,000 merchant locations and 120,000 automated teller machines, according to China UnionPay). The pact has become the backbone of Discover's strategy, according to Joseph Hurley, the Riverwoods, Ill., company's vice president of network strategic development. Discover's resulting high acceptance in China "gives us the advantage," he said.

Keri Buster, a spokeswoman for American Express Co., said Amex also has "an excellent relationship" with China UnionPay. Through partnerships with three Chinese issuers, it is "acquiring high-quality, high-spending customers from the aspiring, affluent segment" and "seeing much higher average spend than the industry average," she said.

China UnionPay declined to comment for this article.

Visa and MasterCard, while working hard to catch up, still lag Discover in acceptance. Both companies said Visa's sponsorship of the Summer Olympic Games in Beijing has helped boost acceptance.

Visa, which has signed up about 216,000 merchant locations in China, "has seen 19 consecutive quarters of payments volume growth year over year" there, Mr. Chang said. "For the moment we are focused on the foreign currency business, and tourism is our perfect partner."

Mr. Fung said MasterCard will also benefit from the Olympics "because we will see lots of people coming into China to participate and to see China — and that will increase spending." Acceptance of international cards has increased dramatically in major cities, to 80% of merchants in Beijing and 60% in Shanghai, he said.

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