Cash withdrawal from credit cards via POS: It’s illegal and risky

Banks need to propagate to customers that credit cards cannot be used to withdraw money through short transactions, because it is illegal.
Currently, cash withdrawal services from credit cards are very popular. Accordingly, there are a number of companies that have cooperated with banks to apply the Visa card payment channel to accept payment of goods purchase and sale transactions. These companies can help the cardholder to withdraw the entire credit limit granted in cash for other purposes instead of purchasing goods through the card.

The most common way is that customers can withdraw money from credit cards at bank ATMs. In addition to this, there is a service to withdraw money from credit card via POS, customers can withdraw 100% of the granted credit limit.

It is worth mentioning that, cash advance fee when withdrawing through ATM of banks is usually quite high, fluctuating around 4%, while cash withdrawal fee via POS ranges from 1.2% – 1.6%. Therefore, withdrawing money from credit cards via POS is a method preferred by many customers …

Because the interest rate of cash withdrawal on credit cards is lower than that of bank loans, many people have used this method to withdraw cash. Instead of paying interest, the borrower will only have to pay a maturity fee for the withdrawal service.

According to Mr. Nghiem Sy Thang, Director of Banking Technology Division, Viet A Bank, this is essentially a short-term transaction because POS machines only have the function of paying money to buy goods and services. The method of withdrawal is also quite simple, after negotiating with the cash withdrawal service, customers take credit cards to the swipe service and receive 100% of the cash on the card immediately. The content printed on a cash receipt is a consumer purchase or purchase of a valuable item from a “virtual” company.

Mr. Thang said that withdrawing money from credit card via POS machine is convenient for users but has high potential risks, because this is not a form of transaction recognized by law.

The first risk is that when customers withdraw all cash and use that limit, they may fall into debt. Therefore, when using a credit card must consider financial plans to ensure payment can be made when the due date. Because if you do not pay in time the statement, the bank will be fined for late payment.

Although there are also cash withdrawal services in the market, there are credit card maturing services that will help customers to transfer debt to the next period, but the long-term use of these services will cost you money Withdrawal service will not be small.

Another risk that Mr. Thang pointed out is that withdrawing money from credit cards will cause insolvency and risks for banks due to arising bad debts.

Facing this situation, finance expert – bank Nguyen Tri Hieu said that banks must revise their systems, review customer data. If you see customers withdrawing or buying transactions regularly to the maximum of the credit card limit, there must be a warning. If the bank finds out that a customer has used such improper transactions to withdraw cash, they must immediately terminate the customer’s credit contract or credit card lock.

TS Hieu also added that banks need to have data, list of transaction points of companies and businesses that they used to use short transactions to withdraw money for customers. promptly handled.

“With customers, banks need to propagate so customers know clearly that they can not use credit cards to withdraw money through such fraudulent transactions, because it is illegal.”, TS. Nguyen Tri Hieu said./.

According to Chung Thuy / vov.vn