Mobile payment company Alipay is going to start charging a fee of 0.1 percent to customers who use the service to decrease their credit card debt, according to a report in The Wall Street Journal.
The move is an effort to handle increasing costs for the company. Alipay, which is based in China, has had to deal with China imposing tighter financial regulations over the last year, and it’s made it more difficult for the company to make money.
Ant Financial, which owns Alipay, has had increased revenue but it didn’t see a profit in Q4 of 2018, due to increased spending on customer procurement, expansion and development of technology.
The company has upwards of 700 million users in China. The fee would be charged for credit card payments that are more than $299 a month, and the change will start on March 26.
These credit card payments used to be free, and Alipay handled $10 trillion in credit transactions in the 12 months leading up to September.
Alipay told users that was sorry to impose the fees, and regrets any inconvenience it causes. The company said the move is to “help ensure the sustainable development of [Alipay’s] credit card repayment service.”
WeChat Pay has also started charging fees, as it also imposed a 0.1 percent fee on credit card repayments, regardless of the size.
Ant’s profit margins were pressured by Chinese regulators requiring companies to put customers’ funds into escrow in accounts that don’t bear interest, into China’s central bank. Payment companies are now required to clear mobile payments through a clearing house that the government owns. This reduces fees that payment companies can get for payment processing.
The charging of fees, it seems, is becoming a new trend with mobile payment firms in the country, according to Xue Hongyan, a researcher at the Suning Institute of Finance, especially since they’re used to giving away subsidies and freebies to attract customers.