Comprehensive China Business News , Beijing Business Daily, Shanghai Securities News reported that Alipay, WeChat and some banks have cooperated to launch the "Credit Card Cash Withdrawal" function. Users can directly withdraw cash from their credit cards on the Alipay page without having to go to an ATM machine or bank counter. Information shows that there are currently 3 credit cards including Ningbo Bank , Everbright Bank and Ping An Bank that support cash withdrawals.
Currently, this function is in a small-scale testing stage on both platforms.
Credit card cash withdrawal is essentially a cash advance service provided by the card issuer. It is also one of the basic functions of credit cards and has existed for many years. According to Shanghai Securities report, currently, the number of users of the two major platforms has exceeded 1 billion. Analysts said that banks’ attempts to cooperate with Internet platforms to withdraw cash online should be to increase the use of credit cards by the bank’s own users.
Alipay and WeChat launch credit card cash withdrawal function
The so-called credit card cash withdrawal is also called cash advance. Used when cardholders face temporary capital turnover needs. Many banks’ credit cards now support the withdrawal of cash or electronic cash through offline ATMs and online apps.
According to Shanghai Securities News, invited user tests found that on Alipay, they searched for "Credit Card Cash Withdrawal", entered the bank applet through the service collection page, and then performed related operations. Currently, this feature is in small-scale testing.
Source: Beijing Business Daily
According to Beijing Business Daily, in addition to Alipay, WeChat also shows users the cash withdrawal entrances of some banks. You can view and withdraw cash on the credit card repayment operation page. Credit card cash withdrawal entrances can also be found in self-operated channels such as bank apps.
At present, WeChat and Alipay waive handling fees for credit card cash withdrawals, and the interest calculation method is basically the same as the bank’s own channels, but the specific approval work is still completed by the bank.
Source: The WeChat and Alipay-related service agreements obtained by
reporters from Beijing Business Daily show that the above-mentioned cash withdrawal services are actually provided by banks, and the limit and interest rate are reviewed and determined by the bank. The Internet platform does not charge any additional fees. The service agreement also shows that cardholders can use credit card cash withdrawal services within the cash withdrawal limit given by the card issuer, and can choose between "single monthly repayment" and "monthly repayment".
The funds withdrawn from the bound credit card can only be withdrawn to the bank debit card bound to the cardholder. This means that the use of cash withdrawals will be carried out in accordance with the bank's capital control requirements. Yu Baicheng, president of
01 Research Institute, said that usually the upper limit of credit card cash withdrawals is 50% of the total credit limit. Therefore, the demand scenario for credit card cash withdrawals is very similar to that of consumer credit products such as "Jiebei".
According to China Business News, "Credit card cash withdrawal is actually a function that has always existed before, but it was more run on ATM machines and bank online APPs before. The new function launched on the Internet platform is essentially to help credit card cash withdrawals become an online auxiliary method, providing traffic and purchasing channels." Wang Pengbo, a senior analyst in the financial industry of Broadcom Analysis, also told reporters.
For the Internet platform, this not only enriches its own product system and increases product diversity, but also helps improve user stickiness and increase revenue; for banks, it is equivalent to adding a major channel. "Originally, these channels were self-operated by banks, but now the Internet channel has been added, which will help improve marketing and processing opportunities." A person in charge of the credit card center of a city commercial bank told reporters.
It is understood that three credit cards, namely Ping An Bank, Bank of Ningbo, and Everbright Bank, currently support Alipay’s cash withdrawal function.
The flow of funds is the focus of supervision.
After cooperating with third-party platforms to open credit card cash withdrawals, how to control the flow of cash withdrawals is also an unavoidable topic. On the cash withdrawal pages corresponding to WeChat and Alipay, it is also mentioned that cash withdrawal funds are only for consumption and cannot be used for investment, financial management, house purchase, etc.
According to the Beijing Business Daily, Wang Pengbo, a senior analyst in the financial industry of Broadcom Analysis, pointed out that in accordance with the relevant provisions of the "Notice on Further Promoting the Standardized and Healthy Development of the Credit Card Business", banking financial institutions should accept credit card applications, customer information collection, identity verification, card issuance review, contract (agreement) terms signing and other business links through self-operated channels, that is, the core risk control review should be completed by the bank.
"After cardholders withdraw cash through credit cards through third-party institutions, the use of funds should also be controlled by the bank. In actual use, cash withdrawals may be used in restricted or non-consumption transaction scenarios, and it is difficult to supervise the whereabouts of funds. This also puts forward higher requirements for banks." Wang Pengbo added.
Analysys Financial Industry Senior Analyst Su Xiaorui also mentioned that in this model, Alipay and WeChat, as function providers, mainly play a role in display and drainage. Credit limits and core risk control still need to be carried out by banks, and the control of cash withdrawals must be further strengthened. During this process, the third-party platform also needs to remind users of the corresponding interest rates and repayment rules for cash withdrawals, and make it clear that funds cannot be used in prohibited areas such as real estate speculation and stock trading .
According to the Shanghai Securities News, a person from the credit card center of a joint-stock bank told reporters that the bank has expanded the cash withdrawal function of its own channels to external channels. It is currently unclear whether there is certain interaction of customer information behind it. If there is, this may conflict with the new regulations on the healthy development of credit cards and the protection of customer personal information in the personal information protection law .
"The bank's own risk exposure may also increase. In this model, the bank needs to insist that risk control is completed independently by the bank and cannot outsource the bank's core business to a third party." The above-mentioned credit card center person reminded.
According to China Business News, reporters learned that after withdrawing cash directly through Internet channels, the funds can only be withdrawn to the bank debit card bound to the person. If you withdraw cash from a Ping An Bank credit card on WeChat, the withdrawn funds can be withdrawn to a Ping An Bank debit card or to other bank debit cards under the user's name. This means that the relevant funds after withdrawal need to be supervised by multiple parties.
Overall, more banks may join the online credit card cash withdrawal team in the future. Wang Pengbo, a senior analyst in the financial industry at Broadcom Analytics, believes that this type of cooperation is expected to gradually expand to a wider range of third-party channels. However, considering the comprehensive cash withdrawal costs, compliance requirements, etc., credit card cash withdrawals will have higher channel qualification requirements.
Credit card business has shrunk
Various banks are actively trying to save themselves
The fact that banks are cooperating with Internet platforms such as Alipay and WeChat to withdraw cash reflects the current difficult situation in the development of the credit card business.
According to the Shanghai Securities News, a number of listed banks recently disclosed their 2022 semi-annual reports and mentioned that due to the impact of many factors, consumption recovery was less than expected, and the credit card business was greatly affected. In the first half of the year, the growth rate of the number of circulating accounts and loan balances was single digits, or even negative. For example, the Postal Savings Bank of China's transformation into retail saw a decline in credit card balances in the first half of the year. As of the end of June 2022, the bank's credit card credit balance was 174.555 billion yuan, a decrease of 0.18% from the end of the previous year.
As the credit card business shrinks, there are also hidden concerns about changes in asset quality. The recently released payment system operation report for the first quarter of 2022 by the People's Bank of China shows that as of the end of the first quarter of 2022, the total outstanding credit card credit overdue for six months was 1.092676 billion yuan, with a month-on-month growth of 37.71%. This means that the pressure on credit card overdues is increasing.
In fact, the credit card non-performing rates of the aforementioned listed banks increased in the first half of the year. Ping An Bank said that in order to strengthen risk control, it has significantly tightened the access threshold and limit management of credit cards.
After the implementation of the new credit card regulations in July this year, banks have strengthened their efforts to rectify the credit card business. On the one hand, they have restricted transaction activities, and on the other hand, they have cleaned up "sleeping cards". The expansion phase of credit card scale has ended.
Against this background, some banks have cooperated with Internet platforms with more than 1 billion users to test online cash withdrawal functions, which is naturally regarded by the industry as a move to increase the utilization rate of credit cards by their own users."For banks, credit card cash withdrawals have an additional entrance, which will help increase user activity and business volume." Yu Baicheng, president of Lingyi Research Institute, believes.
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Daily economic news is compiled from Beijing Commercial Daily, China Business News, and Shanghai Securities News
Source: Legal Network
