China will open up its market for bank card clearing transactions to foreign players.
Currently Visa and Mastercard piggyback their services on China's UnionPay when accepting yuan payments and pay network access fees.
Rules and regulations have yet to be determined regarding opening up the market which was valued at $6.84 trillion last year.
This is set to resolve a longstanding dispute between the US and China over electronic payments. In 2012, the WTO ruled that China's policies discriminated against foreign card card companies.
Shares in both Visa and Mastercard have surged in value since the announcement made yesterday.
Foreign firms will be able to set up their own clearing companies in China and apply to the central bank for licenses for bank card clearing businesses from June 1, the State Council said on its website on Wednesday. The measure is set to end a near monopoly held by domestic champion China UnionPay Co Ltd, and allow Visa and MasterCard, the world's two largest credit and debit card suppliers, to challenge the state behemoth. Bank card consumer transactions for both credit and debt stood at 42.38 trillion yuan ($6.84 trillion) last year, China's central bank said, representing annual growth of 33 percent. The move is also set to resolve a longstanding trade dispute between China and the United States. In 2012, the World Trade Organization ruled that China's policies on electronic payment providers discriminated against foreign card companies.