UnionPay curbs bank card use for overseas insurance purchases

October 31, 2016 08:53
China UnionPay has announced new rules to restrict use of bank cards by mainlanders to buy insurance products overseas, particularly Hong Kong. Photo: Bloomberg

China UnionPay Co. has banned mainland customers from using their bank cards to buy insurance products overseas other than accident and medical-related policies.

The country's biggest bank card provider said on Saturday that mainlanders using debit and credits cards issued by UnionPay will only be allowed to buy accident, illness, and tourism-related insurance policies overseas, and that other investments are prohibited, the Wall Street Journal reports.

The move comes as authorities try to stem capital outflow from China and prevent the renminbi from sliding further.

China's forex regulator had earlier expressed concern as an increasing number of mainlanders have been buying insurance policies in Hong Kong, particularly life insurance policies with investment functions, to hedge against the renminbi weakness.

The purchase of insurance policies has also been used to bypass a US$50,000 limit Chinese citizens are allowed to move overseas a year, the Journal noted.

Visitors from mainland China bought HK$30.1 billion (US$3.85 billion) of insurance products in Hong Kong during the first half of 2016.

That compares with such investment of HK$31.6 billion in the whole of 2015, the report said, citing data from the Hong Kong Office of the Commissioner of Insurance. 

In its statement over the weekend, UnionPay reiterated that each transaction of overseas insurance policies using its cards will be capped at US$5,000, a limit imposed by the forex regulator earlier this year.

There is still no limit on how many times customers can swipe their cards to complete transactions.

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