China's credit card debt fueled by shady business practice

'Cash-out service' lets small payment processors survive under shadow of Alipay

The performance of third-party payment processors shows that "cash-out services" are a significant source of financing for individuals and businesses during the pandemic. (Photo by Caixin)

ZHANG YUZHE and TANG ZIYI, Caixin

July 12, 2020 02:44 JST

An illicit business that has become a lifeline to many of Alipay and WeChat Pay's smaller peers has again caught the attention of regulators for contributing to China's ballooning credit card debt, a worsening problem amid the COVID-19 pandemic.

The business, known in China as "cash-out services," allows individuals and businesses to tap credit cards for cash advances at costs far lower than normal.