following the restriction of real estate merchants, several banks announced that they would close credit card tobacco withholding transactions or restrict credit card transactions in MCC related to the tobacco industry
On March 9, Agricultural Bank Of China Limited(601288) issued the announcement on closing the credit card tobacco withholding business, indicating that it would further standardize the use of credit card funds. According to the relevant regulatory requirements, would gradually close the bank’s credit card tobacco withholding transaction from March
It is worth noting that many banks have previously announced that they will restrict the transaction of credit cards in MCC related to the tobacco industry (MCC code is also known as merchant category code, which is set by the acquirer for special merchants to indicate the UnionPay card transaction environment, the main business scope and industry ownership of the merchant).
For example, Postal Savings Bank Of China Co.Ltd(601658) announced on February 26, 2021 that in order to strengthen the compliance management of credit card business, the bank will centrally control the non consumer transactions of credit card, and will officially close the tobacco withholding transaction of credit card and the tobacco wholesale transaction with MCC 4458 from March 31, 202 7
China Construction Bank Corporation(601939) also announced that in order to create a legal and compliant credit card use environment and advocate reasonable consumption of cardholders, relevant transaction control will be strengthened, CCB Credit Card cardholders shall not use CCB credit cards in domestic tobacco merchants (merchant category code 4458), and the annual cumulative transaction amount shall not exceed 1 million yuan
In recent years, under the regulatory requirements of “no speculation in real estate”, real estate related merchant transactions have also been strongly restricted by banks from transaction authority to transaction limit. With the deepening of supervision, credit card transaction control in many fields such as tobacco industry is also upgrading.
With the rapid development of credit card business, the problems of high complaint volume and rising non-performing loans are becoming more and more prominent. According to the latest data, in the fourth quarter of 2021, among the banking consumption complaints received and transmitted by the China Banking and Insurance Regulatory Commission and its dispatched offices, involving 44968 complaints about credit card business, an increase of 1.3% month on month, accounting for 49.6% of the total complaints
At the same time, the regulatory control of credit cards is also gradually increasing. In June 2020, the consumer rights and Interests Protection Bureau of the China Banking and Insurance Regulatory Commission issued the consumption tips on the rational use of credit cards to remind consumers to spend rationally in overdraft, not to “keep cards with cards”, “repay loans with loans”, and not to “borrow for a long time”. In December 2021, the China Banking and Insurance Regulatory Commission formulated the notice on further promoting the standardized and healthy development of credit card business (Exposure Draft), which made efforts from the policy side to “force” the development and reform of credit card. In this way, the regulatory authorities can promote the rectification of the credit card industry, promote the transformation of credit card business from extensive development to fine management, and effectively strengthen the supervision and management of credit card business.
