Macau is preparing to cut the amount of cash China UnionPay card holders can withdraw from ATM machines, in a move from China to curb capital flight.
According to a report from the South China Morning Post on Friday, the move to cut the daily withdrawal limit from MOP10,000 (US$1,251.9) to MOP5,000 is expected to take effect from Saturday, following the discovery that as much as MOP10 billion in China UnionPay ATM withdrawals were made in one month alone.
This isn’t the first time the gaming enclave has cracked down on UnionPay transactions.
In May, Macau’s banks made it a requirement for some merchants to upgrade Union Pay terminals to ones that contain ID readers. As well as this, Mainland customers using UnionPay credit cards became required to produce identity cards or passports when shopping in Macau.
In July, it was reported that illegal transactions using UnionPay terminals reached a total of MOP 2.1 billion (US$262.8) in 16H1.
The total is near double the amount calculated for the full year of 2015 (MOP 1.2 billion).
“We believe the latest move is part of a larger crackdown on currency controls by Beijing, with media reports claiming the action is in direct reaction to currency outflows via Macau, since the beginning of the year. Given the abrupt nature of the action relative to recent positive comments from Macau leaders, we believe the actions are more about currency outflows and less about a worsening view of Macau, by Chinese leaders,” said analysts from Buckingham Research.
In a note from MorningStar on Friday, analyst Chelsea Tam said the new rules should not have any significant impact on gaming.
"In our view, the government’s cut of the withdrawal limit to MOP 5,000 from MOP 10,000 (to USD 626 from USD 1252) per transaction in Macau effective Saturday Dec. 10 will have insignificant impact as players can withdraw cash multiple times per day to skirt the new rule. UnionPay’s daily and annual withdrawal limit continues to be CNY 10,000 and CNY 100,000, respectively. High-end players most commonly pay commissions to pawnshops to withdraw cash in Macau, or they use underground banks to wire money; therefore, they do not necessarily have to rely on the UnionPay ATM withdrawal to get cash in Macau," she said.
Bernstein said "Most Base Mass and lower end Premium Mass customers should not be materially impacted by the withdrawal limit. However, we know that there are individuals who specialize in utilizing hundreds of ATM cards on any given day to withdraw cash and provide liquidity to junket agents and some Premium Mass players. This is where a slightly greater impact could be felt."
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