Part 4
In recent years, financial technology is developing rapidly,while consumer finance has made rapid progress.One of the important components, credit card consumer credit, develops rapidly at the same time, which enriches the hierarchy of the consumer financial industry and contributes to the healthier and diversified development of the consumer financial industry(Elliehausen, G. and Hannon, S.M., 2018).
Our group discussed that, based on the promotion of the digital transformation of banks and the continuation of the stricter financial regulation, credit card consumer credit, as the product with the highest safety factor in consumer finance, will become an important new power of consumer finance in the future(2018). —
The security of credit card is first reflected in the security of cardholder consumption(YUAN, F., XU, D. and ZHAO, Z., 2007). Credit card consumption needs a password to unlock, when the credit card is stolen or lost, the first time you can contact the bank to report the loss, some banks also have compensation insurance(Sharpe, D.L., et al., 2012). The second is a safe and reliable social foundation. The steady style of financial practice, which controls leverage at 1:1.5, reduces the risk of bad debt.Third, because credit cards are the earliest launched in consumer financial products, at present, the financial market has established the basic standard of credit cards, and makes clear provisions on violations such as "inducing blind lending" and "too high interest rate", which effectively guarantees its healthy
Development(Horvath, A., et al., 2021).
Its development is mainly reflected in: (1) for the credit card itself, the user quality is relatively high.It can be seen from the analysis of SY and MJY, that the subjects of credit card consumers are people with stable academic qualifications in cities, and they have a strong consumption coverage. (2) Product and service content is constantly upgraded.Installment business is an important source of credit card interest income, and its business types already include bill installment, consumption installment, cash installment and merchant installment. (3) There are various types of credit card application scenarios, and its business scope has been expanded from the original department stores, home appliances, cars to tourism, home decoration, education, wedding celebration and other aspects, comprehensively covering all fields of consumer life and consumption(Macaire, C. and Naef, A., 2021).
It is worth mentioning that the attack of COVID-19 in 2020 directly affects the offline entertainment industries such as catering, tourism, education and retail, aggravates the downward pressure on the global economy, and the overall social consumer demand is suppressed.In the short term, consumption is suppressed, and industrial chain terminals and enterprises facing consumers are the most affected and most directly affected by the epidemic.This is when credit cards made a "equipment upgrade".
For example, the Central Bank of China issued the Notice of the People's Bank of China on Promoting the Marketization Reform of Credit Card Overdraw Interest Rate, announcing that the upper limit and lower limit management of credit card overdraft interest rate will be cancelled from January 1,2021, and the credit card overdraft interest rate will be determined through independent consultation between card issuers and cardholders(Margiono, A., 2020). The daily interest rate range of credit card overdraft rate is 0.05% -0.035%, and the annualized interest rate range is 18.25% -12.78%, while the daily interest rate of Huabei is only about 0.02%, and the daily interest rate of most loans is about 0.04% or less.Credit card interest rate "loosening", directly challenged the Internet financial products such as Huabei.Dong Ximiao, chief researcher at Zhaolian Finance, said: " A flexible pricing strategy helps banks increase innovation in credit card products and enhance the attractiveness of credit cards to young customers.After the liberalization of credit card overdraft interest rate, the credit card flexibility and business extentility of banks will be further improved (2020). Different marketing strategies and risk control strategies can be formulated according to different customer groups to enhance customer stickiness.
With the further marketization of credit card policy, the credit card business also makes breakthroughs in the process of digital transformation. During the epidemic period, some banks launched remote contracts without contact to facilitate customers to apply for cards(Meena, M.M.R. and Parimalarani, G., 2020). China UnionPay together with commercial banks launched the UnionPay unlimited credit card, through the bank app or binding cloud flash payment, Alipay, WeChat, etc., for consumption, to improve the digital service ability of credit card products (Stark, J., 2020).
Like to know more about credit card or want to be a more rational consumer？Contact the McAleese group.
—Yang Yang
17,october,2021
Reference：
Elliehausen, G. and Hannon, S.M., 2018. The Credit Card Act and consumer finance company lending. Journal of Financial Intermediation, 34, pp.109-119.
YUAN, F., XU, D. and ZHAO, Z., 2007. A Kind of Solution that Raises the Credit Card Safety. Microcomputer Applications, p.03.
Sharpe, D.L., Yao, R. and Liao, L., 2012. Correlates of credit card adoption in urban China. Journal of Family and Economic Issues, 33(2), pp.156-166.
Horvath, A., Kay, B.S. and Wix, C., 2021. The covid-19 shock and consumer credit: Evidence from credit card data. Available at SSRN 3613408.
Macaire, C. and Naef, A., 2021. Impact of Green Central Bank Collateral Policy: Evidence from the People’s Bank of China.
Margiono, A., 2020. Digital transformation: setting the pace. Journal of Business Strategy.
Meena, M.M.R. and Parimalarani, G., 2020. Impact of Digital Transformation on Employment in Banking Sector. International Journal of Scientific & Technology Research, 9, pp.4912-4916.
Stark, J., 2020. Digital Transformation of Industry: Continuing Change. Springer Nature.
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