China banks lower online payment limit to fight third party payment companies

Days ago, we have reported a piece of news about China Merchants Bank’s (CMB) cutting of online payment limit by shrinking the daily maximum consumption limit of the All-in-one card of General Edition to 500 yuan from 5000 yuan, and changing the customer-settled online payment limit of credit cards to “not over 500 yuan in each payment”. Our journalist discovered in the follow-up inspections that although banks claims the aim of reducing the online payment limit is to keep away from transaction risks, they have other aims actually, which is to suppress third party payment and to compete for direct connect merchants.

Banks rate increased by 4-5 times

To users, CMB’s cutting of payment limit of General Edition credit cards is rather inconvenient for if they want to make a block trade online they have to buy a Ukey which is charged in most of banks with the price vibrating around tens of yuan as understood by journalist.

And to third party payment companies, the cost increased as well. “CMB has greatly increased its large payment gateway rate of credit cards to 1% as against thousandths before, which is a 4 to 5 times increasing.” principal of a payment company told journalist, “it is simply a one-side agreement. Now if a user needs a large payment, he must first pay for the Ukey, on the other hand, if a payment company wants to cooperate with this bank, it must pay more rates. The bank is the beneficiary in both ways.”

This principal also revealed that the increasing cost will finally be partly digested through the most direct way of transferring to merchants, which may cause some loss of merchants.

What would third party payment companies react to this suppressing measure? As understood, most payment companies believe that this kind of suppressing measure is not good to normal market competition. “Presently, we are bringing out facts and reasons to CMB to let them know that it is in vain and meanwhile drive merchants to choose a more appropriate way of payment.” A staff of a payment company said.

Banks want to develop their own payment companies

The close cooperation at very beginning between banks and third party payment companies has converted to today’s intense competition. The once formed win-win situation may be broke. All of these are, after all, simply for the word “profit”.

Journalist got information from insiders that except for CMB who already in the process of establishing a third party payment company, some other banks also have actions. They planned to develop their own payment companies to digest all the links of the whole industry chain instead of providing spaces for others.” “In the cooperation before, banks are in charge of fundamental services while the third party companies were responsible of expanding customer markets. They had clear job assignments and win-win results. Now that the market has been expanded to a certain scale with a clear future, banks also want to take a share of it.”Insiders said.

And journalist also had this information proved by a relevant employee of a third party payment company. He expressed that some of the banks have already started their preparation of third party payment. State owned banks may act relatively slow because of their mechanism system, while commercial banks will react faster.

Talking about the pressure that banks brought to third party payment companies, this employee said, current pressure is not strong enough because firBanks Cut E-Commerce Consumption Limit.

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