After WeChat (微信) and Alipay (支付宝) announced to charge for the credit card payment service successively, JD Digits (京东数科) and Du Xiaoman (度小满) under Baidu have finally launched their new charge rules.
BATJ, abbreviated the four Internet giants in China, bid farewell to the era of this free service in their financial business sector.
On August 5, JD Finance App has adjusted new rules for credit card payment. The rule shows that from August 5 to August 31, the maximum payment amount for each user is limited to CNY 10,000 with no fee attached. Starting from September 1, 2019, every user still gets a free credit card payment amount of CNY 10,000. When the payment exceeded the free quota, a 0.15% fee will be applied for the excess amount.
For fee calculated less than CNY 0.1, the company will just charge CNY 0.1. JD Finance also clarifies the definition of "each user". The user who carrying the same mobile number, ID number, JD account, bank account, device and other information related to identity will be considered as an identical user.
Similarly, Du Xiaoman released their new rules early on July 29 that the company will charge 0.1% of total credit card payment amount as service charge since August 29. For fee calculated less than CNY 0.1, Du Xiaoman will charge CNY 0.1 as well.
The difference in rates between these four Internet-gene fintech companies is small, only Alipay and JD Digits have a free quota of CNY 2,000 and CNY 10,000 respectively.
The reasons for Internet companies to charge for credit card payment are threefolds.
First, the cost of "slotting fee" charged by banks is high. When mobile payment companies launched the fast pay (快捷支付), for every transaction the bank will charge at least 0.1% of the deal amount from payment companies. Pony Ma (马化腾), CEO of Tencent said in early 2016 that Tenpay would bear the cost of CNY 300 million per month to pay for the slotting fee, and even more with its fast-growing user base.
Second, after People's Bank of China has established a nationwide clearinghouse for online payment services -- NetsUnion Clearing Corporation (NUCC, 网联) -- to instruct payment companies under BATJ to route their transactions, the dispose flexibility and profits of payment players were trimmed largely. Besides, PBOC also requires provision saved with no interest generated in PBOC, further increased the cost of these fintech service providers.
Third, the previously free service was provided to attract new users. Now the Internet giant companies that bulk up substantially in the financial business sector have accumulated their users and formed a relatively fixed user habit. The cancel of free credit card service fee may not cause user loss and will even lead users to credit e-card or other financial services within their own ecosystems.
The fast development of infrastructure in China has enabled mobile payment, financial and risk management technologies to be applied and iterated, leveraging their product variety and user stickiness.