Crackdown on illegal UnionPay will have knock on effect

Tuesday 25th of August 2015

Shops in Macau using the authorized UnionPay system are in danger of becoming more restrictive when taking in new customers, which would impact casinos with the highest premium mass and VIP exposure, following a police bust of five shops using an illegal system, according to Deutsche Bank.

On Monday police busted five local jewelry and telecom shops using a UnionPay system which illegally connects to a server inside mainland China - as opposed to using the authorized UnionPay system connecting to the Macau banking network. These five shops busted were located on the Macau Peninsula, near Wynn and MGM. Police arrested 17 people and seized MOP13.5 million in cash, along with 11 rigged UnionPay point-of-sales devices.

The purpose of the system is for customers to leave the shop with cash rather than the goods supposedly purchased.

“These transaction records would show the UnionPay cardholders buying expensive watches in Macau but, more often than not, these cardholders leave the shops with a stack of cash, often in the range of HK$100k-500k (rather than the expensive watches),” Deutsche Bank analysts wrote in a note.

Such a system is used by many premium mass players, and small VIPs and junket agents, who use local watch and jewelry shops to access cash in Macau by swiping their UnionPay debit cards issued by Chinese banks.

But though shops using the authorized UnionPay system are still currently open for business, and only those few shops with illegal UnionPay devices remained closed, “we worry that even these shops may become more restrictive when taking in new customers. Companies with highest premium mass exposure (MGM China, MPEL, Wynn) and those with highest VIP exposure (Wynn Macau & Galaxy) may be impacted.”

Crackdown Cash Cards Union pay Jewelry