China is set to open up its market for clearing domestic bank card transactions paving the way for foreign players such as Visa and MasterCard to venture into the region.

Rules published by the State Council allow foreign firms to set up their own clearing companies in China and apply for licenses to the central bank starting from 1 June 2015.

Foreign firms will require to pay registered capital of CNY1bn ($161m), covering various aspects, during the application process.

The measure will end the monopoly held by China UnionPay, the country’s domestic cards and payments firm, allowing competition with the entry of Visa and MasterCard, the world’s two largest credit and debit card suppliers.

People’s Bank of China in a statement said: "Opening up the market for bank card clearing will help improve the country’s card-clearing services through market competition."