China Says “No” To Virtual Credit Cards

Vaniceseasonal's Blog

Thanks;Gordon Orr
Chairman, Asia at McKinsey & Company

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The end of last week saw the Chinese central bank intervene to shut-down an innovative online service of virtual credit cards

, launched by Tencent and Alibaba, in conjunction with Citic Bank. This move came the day after the services were launched, which seemed a little odd – why did they allow something to go to market rather than intervene to halt the services before they could be launched?

The answer lies in a combination of the absence of regulation or policy in some parts of the banking sector, and the willingness of the large Internet players to take the absence of prohibition to mean permission, so that they have largely been pushing into financial services with a logic of “if enough scale with enough satisfied customers can be reached quickly”, then it’s too late for the regulator to shut them down…

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