As illegal services that convert credit card limits into cash are spreading in Vietnam, police authorities have issued multiple warnings. Reports indicate that ghost companies or individual businesses are acquiring POS terminals and using fraudulent transactions to dispense cash.
On June 21, local media reported that police in Hanoi and Bac Ninh Province revealed that certain organizations and individuals are misusing the card payment system to conduct fraudulent transactions via POS terminals. These terminals are devices used in stores, supermarkets, and various businesses to process card payments. Authorities warned that such activities distort the original function of credit cards and threaten the overall stability of the financial system.
One common method identified by police involves establishing companies or individual businesses that do not engage in actual operations, then obtaining POS terminals. After completing business registration, these entities secure POS terminals from banks without engaging in any real sales or services. They then process customer credit card transactions to create the illusion of legitimate product sales before dispensing cash.
Credit Card Cycling to Extend Repayment... Splitting Transactions to Evade Oversight
Bac Ninh police also noted a rise in similar cases. Investigations revealed that the companies involved existed solely to enter into contracts for installing POS terminals, with no actual business activities taking place.
Once a transaction is approved, the operator pays cash to the cardholder or transfers funds to their account, charging a fee that ranges from 2% to 10% of the transaction amount. Authorities explained that while these transactions may appear to be normal credit card payments, they are, in fact, illegal cash withdrawals utilizing credit card limits.
Police indicated that some cases involve specialized credit card cycling services. These services repeatedly cycle payments through multiple credit cards to extend repayment periods, thereby concealing the risk of deteriorating repayment ability and postponing debt burdens.
Some operators are also reportedly offering credit card debt extension services that temporarily settle existing debts by cycling card usage. To avoid detection by financial institutions' risk management systems and regulatory oversight, they split transaction amounts into multiple smaller transactions or use several POS terminals, dispersing the flow of funds across various accounts.
Concerns Over Rising Non-Performing Loans... Potential for Money Laundering and Fraud
Authorities expressed concern that fraudulent transactions using POS terminals could pose serious risks to the financial sector. Such actions violate financial and banking regulations and could lead to property fraud, money laundering, tax evasion, and other illegal activities related to business and finance.
There are also concerns that the cash flows generated through fraudulent transactions could be exploited for various criminal activities. The ease with which card users can withdraw cash for purposes other than intended undermines the credit card system's integrity and could lead to an increase in non-performing loans.
Hanoi police added that credit card cycling could compromise the safety and transparency of cashless payment systems, potentially causing cardholders to lose control over their financial obligations. They emphasized that individuals should not lend their cards or provide card information, OTP authentication numbers, or transaction passwords to others.
Bac Ninh police have urged commercial banks and credit institutions to strengthen document reviews before entering into contracts for supplying POS terminals. They also called for enhanced transaction monitoring systems and regular data comparisons to detect and block signs of unusual transactions at merchant locations.
* This article has been translated by AI.
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