During the investigation, a reporter from the Beijing News found a marketing page circulating on WeChat called "2019 MPOS Official Event". "Tongyipay|Official Activity Center" is displayed directly at the top of the webpage. About 2 hours after the reporter filled in the contact information, a salesperson called back.
The salesperson said that the company's full name is "Zhejiang Chuangshuo Electronic Technology Co., Ltd." and it is a partner of Tonglian Pay. The two parties have signed a long-term agreement. The company is currently selling Tonglian's mobile POS machine called "Tongyipay" on behalf of Tonglian. After receiving the device, customers can fill in information on the Tongyipay APP, conduct identity authentication, bind payment cards, etc., and the funds can be transferred to their accounts in seconds.
During the consultation, the salesperson said at the beginning that this device is for personal use. If it is used by a merchant for collection, a business license is required to apply for the device, "so you cannot maintain a card." (The normal way to maintain a card is to swipe more cards and spend more, pay back in time, and maintain a good credit card record, which will help increase the limit. There is also a very risky way to maintain a card, which is to continuously apply for credit cards and use the money from the next credit card to repay the debt of the previous credit card, in an attempt to extend the duration of the debt.)
"When you swipe your card for normal consumption on a POS machine, such as buying something in a supermarket, the name of the supermarket will be displayed on the receipt." He further introduced that when individuals use this mobile POS machine, they write a general location when filling in the information, such as a certain community. When the card is swiped, the backend will match a local nearby merchant to ensure the authenticity of the bill.
In his opinion, the biggest difference between the TongYisu mobile POS machine sold by Chuangshuo Technology and the equipment used by merchants to collect payments is that the transaction address will jump back and forth, which is also the "way to maintain a card." "If an account spends 20,000 to 30,000 yuan at the same merchant, the bill will be unreal. Normally, merchants in the consumer's area should have transactions. The bank mainly looks at this. The bill we send to the bank matches the real local merchant of the user, which can be many. It cannot be seen whether it is a normal credit card payment or a cash out. The upper limit for a single credit card payment is 50,000, and the single-day limit is 300,000." The salesperson said.
In order to further dispel the reporter's concerns about the risks of such an operation, the salesperson also said that the company is the largest POS machine operation center in Zhejiang. It was established in 2013 and has 22 branches across the country. It has a "strategic cooperative relationship" with Tonglian Pay and took 1 million devices at one time. Most of them were sold by individual agents through online and offline channels, and they were sold out in about a year. The monthly transaction volume now exceeds tens of billions, and all POS machines sold are for personal use. “You can rest assured that you will not be investigated.”
The salesperson said that the equipment package will be mailed to the user, and a 50 yuan activation deposit will be charged before delivery. The deposit will be refunded if the cumulative credit card transaction volume reaches 5,000 yuan within a month. In his circle of friends, screenshots of multiple users receiving their deposit refunds on WeChat were displayed.
Selling the equipment itself will not bring any income, and the "number of installed machines and credit cards" is an important profit point. According to his introduction, using this Tongyi Pay POS machine sold by them, the credit card payment rate is 0.5%, plus a 3 yuan second payment fee. "Swipe 10,000 yuan and pay a handling fee of 55 yuan. The bank, UnionPay, and payment company will share the share, and the payment company will then share it with us." The person said.
Under normal circumstances, from the occurrence of a consumption to the transfer of funds to the merchant, it is necessary to go through the process of "the merchant declares the bill (the merchant sends the bill to the bank), the bank passes it to the payment company, and the payment company then calls the merchant." "The bank bill is T+1 and will arrive the next day. Now it arrives in seconds. It is advanced to you by the payment company." The person said, so even if you swipe a credit card and the funds enter your bank debit card, the bank will not find it immediately. The key point is "transfer it like this at the payment company."
The customer service staff of Tonglian Payment confirmed to reporters that Zhejiang Chuangshuo Electronic Technology Co., Ltd. is their first-level agent and may have more equipment. The specific amount cannot be verified. The customer service staff also confirmed that the Tongyi Pay POS machine can be used by individuals and does not need to provide a business license when applying. "The situation in which it is used depends on your own collection needs, but it is not used for cashing out." Regarding how the company regulates the sales behavior of agents, the customer service staff said that they did not have the authority to answer and needed to report it.
A few days later, relevant people from Tonglian Payment called back and said that the company's management of agents strictly complies with the central bank's bank card acquiring business outsourcing management notice, checks and verifies business licenses, legal person ID cards, account opening certificates, etc., and assesses financial status, team members, risk control capabilities, etc. before allowing cooperation. Tonglian Payment will supervise and regularly investigate the online sales behavior of agents. If an agent is found to be in violation, it will definitely require the agent to stop the behavior and impose penalties. "We have also verified with Chuangshuo Technology that they do not have their own telemarketing channels. If they do, it should be someone else using their name for illegal promotion."
According to it, this device is used for small and micro merchants to collect payments. It will strictly follow the People's Bank of China's bill collection management regulations and carefully verify each merchant who joins the network, including whether it is established in accordance with the law and whether its business activities are legal and compliant. A real-name management system is implemented for merchants. If it is found that the address used by the merchant is inconsistent with the registered address, rectification will be stopped.
Regarding whether the equipment can be mailed, Tonglian Pay related people responded that Tongyi Pay is promoted to the market through agents, and online advertising is allowed, but agents need to handle it offline. If you encounter online sales or receive marketing calls, it is recommended not to accept it.
Behind the market chaos
With so many buyers, it is not ruled out that institutions will give the "green light" to sales by default?
"There are still business opportunities and interest demands." A person close to the clearing agency said that for the agency, selling machinery makes money, and the transaction scale can also increase fee income.
Huang Dazhi, a senior researcher at Suning Financial Research Institute, told the Beijing News reporter that most of the market chaos is caused by layers of subcontracting. The central bank, UnionPay and other institutions implement list-based management, and payment institutions will also review their qualifications when selecting outsourcers. However, payment institution A may subcontract its acquiring business to service institution B, and B may transfer it to service provider C again.
Outsourcers are an important sales channel for many acquiring organizations. Huang Dazhi said that some large acquiring institutions have their own local promotion teams, and most institutions use outsourcing service providers for promotion. A person from a payment institution also said that the company usually expands merchants through local promotion channels to promote compliance, and at the same time expands the size of merchants through merchant referrals, etc. However, outsourcing service providers are strictly prohibited from selling machines through online channels.
"On the one hand, it is difficult for payment institutions themselves to supervise subcontracting. On the other hand, this model increases sales volume. It does not rule out that payment institutions acquiesce in this behavior." Huang Dazhi said.
Contributing to the high transaction volume are also buyers in the market. An individual user with an MPOS machine contacted by the Beijing News reporter said that he mainly obtains credit card points by swiping his card. "I swipe a 10,000 yuan credit card and the money goes into my savings card. Only a 55 yuan handling fee is deducted, but I can get 10,000 credit card points, which can be spent as money. For example, 799 points from some banks can be exchanged for a cup of Starbucks coffee, and the price of a cup is about 40 yuan."
There are also many users who ask about cash-out issues on the Internet. For example, a user consulted on a website and said that he was a merchant and used a POS machine to help others cash out their credit cards. In the first six months, he cashed out about 600,000 yuan per month. The nature of this situation is an illegal business crime or an illegal fund payment and settlement business. There is even content in Baidu’s experience on “how to minimize the cost of cashing out POS machines”.
Ms. Wen, 37, runs a small company. The credit card limits in her hands are more than 100,000, with the highest reaching 300,000. Credit cards were once her tool for moving funds. She said that she borrowed POS machines from other companies to cash out her credit card funds, and when she was about to repay the money, she swiped out the money from another credit card to repay, and she kept doing this for a period of time. But for a one-time cash out of 300,000 yuan, the handling fee is about 1,500 yuan, which she thinks is a bit high. Now that she has a large credit loan from a bank, she doesn’t use this method much anymore.
The existence of people like Ms. Wen who use POS machines to cash out has created chaos in illegal transactions at POS machines.
Increased supervision
Supervision issues normative documents and payment institutions conduct self-examination
The other side of the chaos in the agency market is the increasing regulation in recent years.
In 2016, the central bank made it clear in the "Notice on Matters Concerning Strengthening Payment and Settlement Management to Prevent New Illegal Crimes in Telecom Networks" that it would strictly review the qualifications of special merchants and standardize the management of acceptance terminals. No unit or individual is allowed to buy or sell POS machines (including MPOS), card readers and other acceptance terminals online. "Banks and payment institutions should conduct on-site inspections of all physical merchants and check the usage locations of their acceptance terminals one by one. Any acceptance terminals that have been moved to other machines in violation of regulations and where the actual location of use cannot be confirmed will be stopped."
After March 15 this year, the central bank issued Document No. 85 to rectify the phenomenon of online sales of POS machines. On the eve of National Day, UnionPay also issued a notice, reiterating that POS machines are not allowed to be bought and sold online, and outsourcing institutions are strictly prohibited from using online channels to sell acceptance terminals.
Banks and payment institutions have also stated that they have begun to regulate outsourcing in recent years. An insider from a leading company told reporters that the company was exposed to selling POS machines on Taobao in 2016. After the media exposure, regulators came to inquire. The company established a special team to investigate. It still retains the team and has an internal list of agents. "In the industry, you can find out which agent it is through a little inquiry. Some agent platforms list many partners just to show their strength."
The person also made it clear that to apply for his company's equipment, he must submit a business license, legal person ID card, settler ID card, settlement card and other qualifications in accordance with the requirements of the People's Bank of China; POS machines and equipment are installed on site by staff, and mailing of equipment is not allowed.
Many people in the banking industry also said that if you apply for a bank POS machine, there will definitely be an interview. Either the merchant goes to the bank with a business license, ID card and other materials to apply, and at the same time applies for the bank's debit card, or bank employees go to the merchant's store to verify on-site and take photos to record.
A relevant person from another leading payment institution told the Beijing News reporter that the company continues to strengthen online merchant monitoring, partner management, and linkage with e-commerce platforms to effectively monitor the behavior of online sales terminals. If it is found that there is any behavior of impersonating terminals on online channels, it will immediately require it to remove illegal links and pursue legal liability.
Some online agents have no actual business or have closed down. A person from the "Beijing POS Machine" website said, "I used to be an agent, but I don't do it anymore."
Response and reminder
Be wary of POS machines with “unknown origins”. Those who sell illegally and cash out will be held responsible.
The payment institution denies authorizing the merchant, and the origin of the POS machine is unknown, making it difficult to distinguish the authenticity from the fake. There have been cases of online shopping POS machines being defrauded.
There are reports that due to urgent need for cash repayment, Mr. Liu, who works in Nanping Town, Zhuhai, purchased a POS machine online to cash out. Unexpectedly, he used a card to pay 80,000 yuan, but it has not been received. He suspected that the online merchant had done something wrong and called the police.
Industry insiders remind that some POS machines sold online are equipped with Trojan horse programs that may obtain merchant information, and the transaction security of merchants cannot be guaranteed. And because some POS agents do not have business qualifications and have no professionals, such organizations may withdraw from the market at any time after discovering that the market profit margins no longer meet their needs.
Wang Deyi, a lawyer at Xunzhen Law Firm, said that the illegal use of POS machines to cash out infringes on the order of financial management. Individuals' illegal use may have three consequences. First, it constitutes a civil breach of contract for the card issuing bank, and it should bear corresponding civil liability; second, it violates administrative management order, and may be subject to administrative penalties; third, if the circumstances are serious, it may be suspected of a criminal offense and be held criminally responsible.
Huang Dazhi, a senior researcher at Suning Financial Research Institute, also said that cashing out is a clear violation and penalties will be determined based on the amount. At the same time, both the outsourcer and the acquiring agency are responsible, and the acquiring agency has improper management responsibilities.
Huang Dazhi said that strictly prohibiting online sales is a disguised means to raise the threshold for purchasing POS machines. Supervision should also develop regulatory technology to identify illegal activities such as cashing out.
"Now the technology is very mature. For example, when SIM cards are connected to WiFi, operators can perform GPS positioning, and some SIM cards themselves have their own scope of use, which can be managed through these means." The person in charge of the credit card center of a state-owned bank told reporters. Wang Deyi believes that only by comprehensively using facial recognition, online confirmation, blacklist system, setting upper limit, punitive damages and other means can we fundamentally put an end to illegal use.
People from the above-mentioned payment institutions said that the mobile acceptance terminal has realized transaction-by-transaction positioning. When the transaction address is inconsistent with the actual business address of the merchant, the transaction will immediately trigger the risk control rules, and the payment company should immediately stop the merchant's continued transactions and conduct further verification. For chain merchants (with branches across the country), localized management must be implemented strictly in accordance with the requirements of the People's Bank of China. Merchants can only use local acceptance terminals. Once a merchant moves equipment across provinces, risk control rules will also be triggered and merchant transactions will be stopped.
According to an official from another payment institution, the company implements monitoring from multiple dimensions such as transaction frequency, amount, and card swiping rate. At present, the risk control system has a monitoring coverage of more than 95% for mainstream crime methods such as counterfeit cards and fraudulent transactions. If an abnormality is found in the account, it will be verified first and the merchant will be asked to provide information. If it is not reasonable and legal, measures will be taken to lock the account.
