Alipay and Tenpay have halted the credit card top-up function, and merchants are likely to pass on the 1% handling fee for large credit card payments to consumers.
Netizens who are accustomed to topping up their credit cards to Alipay (Weibo) and Tenpay for large online purchases will be forced to change their habits starting tomorrow - this feature has been canceled.
About a month ago, Alipay announced that starting February 8, it would officially close the channel for topping up credit cards to Alipay accounts. Tenpay had already suspended similar services starting February 1. This move is in accordance with the People's Bank of China's regulatory policy requirements to prevent illegal cashing out of credit cards, aiming to block online loopholes for credit card cashing out.
The market expects that after the closure of the credit card top-up channel, commercial banks may gradually relax restrictions on single small-amount credit card payment limits. Currently, China Merchants Bank has relaxed the limit from 500 yuan to 2000 yuan. However, some merchants are concerned that the discontinuation of this channel may increase the cost of large credit card online payments. Currently, a 1% handling fee is charged for large credit card online payments, and this cost will ultimately be passed on to consumers.
Early implementation of regulatory requirements
"The blocking of the credit card top-up channel was inevitable, and this requirement has already been clarified in the central bank's regulatory system," an insider at Alipay explained to reporters yesterday. About a month ago, Alipay announced that starting February 8, it would officially close the channel for topping up credit cards to Alipay accounts. Tenpay also recently announced that it would suspend similar services starting February 1. This person told the reporter that this is preparation for the upcoming regulatory requirements from the central bank.
Upon reviewing public information, it was learned that at the end of last year, the central bank issued a draft of the "Management Measures for Internet Payment Business of Payment Institutions" for comments, which required that credit cards cannot be used to overdraw for topping up payment accounts, aiming to block the loophole of credit card holders illegally cashing out through third-party payment platforms.
Previously, credit card top-ups could achieve zero-cost cashing out. If credit card holders used the pre-borrowed cash function, they would need to pay a handling fee and related interest to the bank. However, by topping up third-party payment accounts with credit cards and then transferring the funds to a debit card, zero-cost cashing out could be achieved. The suspension of the top-up channel completely "blocks" this route.
However, some merchants are concerned that this move by third-party payment institutions may increase the cost of credit card payments, and this cost will ultimately be passed on to consumers.
Possibility of Increased Credit Card Payment Costs
Alipay stated that after the suspension of the credit card top-up function, it is possible that other bank credit cards may also increase the single or daily limit for small-amount payments. On the Alipay platform, the single limit for small-amount credit card payments for China Merchants Bank has been increased from 500 yuan to 2000 yuan, with the daily limit based on the credit card's own limit. Alipay representatives said that besides China Merchants Bank, they are also communicating with other banks, and it is possible that other bank credit cards may also increase the single or daily limit for small-amount payments. However, some merchants are still worried about the blocked top-up function, as many customers will have no choice but to use large-credit-card payments for high-value transactions. When using this channel, merchants have to pay a 1% handling fee, and this cost will ultimately be passed on to consumers.
South China Morning Post reporter Wang Jingjing
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