Banks set trading limits for WeChat’s financial service

February 11, 2014 Leave a comment

Banks set trading limits for WeChat’s financial service

Peng Wei-lin and Staff Reporter

2014-02-09

Many banks in China have restricted the amount of money their clients can transfer to Li Cai Tong, a popular internet financial service, to avoid a possible funds shortfall, which has led to criticism among their clients.

Li Cai Tong, which was launched through Tencent’s social network platform WeChat on Jan. 22, has become the most popular internet wealth management product among Chinese netizens within the past month.

As China encountered liquidity problems last year, traditional banks imposed trading limits to prevent a fund shortfall during this year’s Lunar New Year holiday.

Before the holiday period, the Industrial and Commercial Bank of China (ICBC) restricted the transfer of money to Li Cai Tong to one deal per day and 10,000 yuan (US$1,600) per transaction. The limit has recently been adjusted to 50,000 yuan (US$8,200) per month after the holiday, which is significantly lower than the original 300,000 yuan (US$49,500) on a monthly basis.

The ICBC stated that it had limited the transaction amount because it wanted to safeguard its clients’ capital. But it did not explain why the upper limit was reduced to 50,000 yuan (US$8,200) per month.

In addition to the ICBC, over 10 banks including the China Minsheng Bank, the Industrial Bank, the China Merchants Bank and the Shanghai Pudong Development Bank, who cooperated with Tencent for the Li Cai Tong service, had set different limits for the transfer of money.

Liu Junhai, a professor at the Renmin University of China in Beijing, said that banks had to learn how to build customer loyalty and retain customers if they wanted to keep the money, adding that restricting their clients’ cash transfer limits is not a long-term solution.

 

Filed under Macro Trends

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