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China limits overseas UnionPay cash withdrawals

TAGs: China, Macau, Macau gaming revenue, unionpay

China limits overseas UnionPay cash withdrawalsThe Chinese government has tightened restrictions on cash withdrawals from foreign ATMs, a move which could affect Macau’s mass gross gaming revenue.

China’s State Administration for Foreign Exchange (SAFE) has announced new annual limits on UnionPay cash withdrawals outside of China.

According to statement posted on SAFE’s website on Tuesday, new rules limit overseas cash withdrawals from China’s Union Pay service to a total of 50,000 yuan ($10,800) for the period between October 1 and December 31 this year.

Under the old rules, there was a daily limit of 10,000 yuan per card but starting January 2016, there will be an annual limit of 100,000 yuan ($21,800),

Beijing’s latest effort to prevent a sharp devaluation of the yuan, which has come under sustained pressure in recent months from record capital outflows as the economy slows and the crackdown, comes two days before the Golden Week from October 1st to 7th.

SAFE will also require banks to add accounts that exceed the cap to a watch-list and forbid further cash withdrawals outside of China, another measures to restrict potential money laundering, followed by an order to monitor “abnormal” accounts that register frequent cross-border fund transfer.

Bernstein analyst Vitaly Umansky said in a note that the new policy could affect mass gross gaming revenue, in particular premium mass—mass customers, essentially high-rollers who aren’t in VIP rooms and who can be counted on to gamble heavily.

“Most Premium Mass customers utilize UnionPay cards (among other means) to access cash for play in Macau casinos. While many customers have multiple UnionPay cards, larger Premium Mass customers may find their access to cash more limited as a result of the new limits,” said Umansky.

Analysts of UBS Securities Asia Ltd. Anthony Wong and Angus Chan think otherwise, saying  that the latest rule will have “no material direct impact” on the gambling market, as “withdrawing cash from ATMs is not a major source of cash for most gamblers” due to the existing daily ATM limit, high transaction fee, and other available means to obtain cash for gambling in Macau.

At this stage, the new policy does not limit overseas purchase transactions with UnionPay cards and Reuters reported that despite numerous raids some pawnshops owners are still willing to process UnionPay card cash advances disguised as product purchases.

“Pawnshop transactions are legal in Macau and occur through approximately 200 shops. However, there is risk that Chinese authorities may pressure Macau into creating tighter regulations around pawnshops,” added Umansky.

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