In a policy shift, third party payment provider Lakala E-Billing Technology & Service Co. has begun charging cardholders when they use its service to pay their monthly card repayments, the Beijing-based company said last week.
On Nov 9, Lakala began charging cardholders from Bank of China Ltd. and Bank of Communications Ltd. 2 yuan (3 U.S. cents or 2 euro cents) per card repayment at the issuers’ direction, a Lakala spokesperson tells PaymentsSource.
“Lakala has no pricing power, and its for the credit card issuer to decide on these charges,” the spokesperson says. Cardholders still may make repayments free directly to the issuers.
This is the first instance of a third-party payment provider in China charging for card repayments. They traditionally have offered the service for free to get customers to come to the provider's platform and use their other services.
A subsidiary of Lenovo Holding Co., Lakala is the largest offline e-payment service company in China. The company provides credit card repayments, funds transfers and utilities payments to users of any of its 30,000 Lakala kiosks, which are payment terminals located in stores, supermarkets and other public locations in 30 cities.
As more issuers use their services, more third party payment providers will begin charging cardholders for repayments, Weidong Wang, an analyst with Beijing-based iResearch Consulting Group, tells PaymentsSource.
“The key is to appropriately measure the cost of the service against the fee and also the timing of announcing a charge,” Wang adds. “But if the user experience is not worth the fee, users will opt out of a paid service.”
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