China Merchants Bank has launched an online cash-advance service for its credit cardholders, the Shenzhen-based financial institution announced late last month. The launch marks the first time a bank in China has offered such a service, which draws from a card’s line of credit to fund the cardholder’s debit card account.
The service provides a faster and more convenient means than using ATMs to secure cash advances, and it solves inherent problems with mini credit cards, which cannot be used at ATMs, according to China Merchants. Mini cards are less than half the size of regular cards and have a smaller magnetic stripe.
The service is available only in yuan-based advances and is limited to the cardholders who have a China Merchants Bank debit card account. Each credit card is allowed to loan funds up to 2,000 yuan (US$293 or 214 euros) per day to the holder’s debit card account, according to the bank.
The bank’s processing fee for the online service is the same–30% of the amount–as the charge for taking a credit card cash advance through an ATM, according to the bank.
Various technologies safeguard the online loan service, such as an anti-phishing software the bank developed in late 2007 and mobile digital certification, China Merchants says.
“Though the service is new in China, it is safe enough to be trusted,” Zhang Hua (Zhang is the family name), a Beijing-based analyst with Boston-based research firm Celent LLC, tells PaymentsSource. ”Online banking in China is well developed, and banks pay a lot of attention to security.”
Celent expects information-technology spending in the Chinese banking industry to reach US$11.3 billion by 2011, mainly on software, hardware and maintenance. “In fact, most online-security risks in China originate from the client side,” says Zhang.
China's first credit card issuer, China Merchants has issued 30 million credit cards since 2002, according to the bank.
