China's mainland residents have been barred from using China UnionPay cards to buy overseas insurance products with investment functions as concern rises over capital outflow rise.
Mainland residents can only use UnionPay cards to buy overseas insurance products related to tourism, including those covering accident and illness, said UnionPay International, a subsidiary of the national bank card association China UnionPay Co., on Saturday.
Card payment will no longer be allowed for investment products, including some life insurance policies, according to UnionPay, which has published a guidance for overseas insurance merchants in handling UnionPay cards. The guidance is being implented on a trial basis in Hong Kong.
The company statement said that recent monitoring had found "a surge in multiple transactions on a single card with a single overseas insurance merchant," but did not elaborate on the phenomenon.
The move comes as slow economic growth and a weak yuan raise concerns of a capital flight. To circumvent restrictions on outbound investment, some mainlanders have turned to purchases of overseas insurance policies that have investment functions.
China caps the value of a single overseas insurance transaction at 5,000 U.S. dollars. The UnionPay statement said that the policy must be strictly observed.
China UnionPay Co. is the only company approved to provide clearing services for bank card transactions in China. Its network covers 160 countries and regions.