China's Crazy Reverse-Credit Cards

In the People's Republic, you 'pay now, buy later'.

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To help its economy weather the trade war, China wants its consumers to splash out. The government has plans to subsidise consumer loans, and banks have been permitted to raise borrowing limits for credit-worthy customers.

But the question of who lends to whom on China's high street is not straightforward. In the West, retailers extend credit to their customers. In China, it is often the other way round.

It works like this. When you get a haircut or eat at a restaurant, the seller encourages you to pay in advance for multiple transactions. You might pay upfront for 10 haircuts, or put 1,000 yuan (S$179) on a prepaid card, and the business will, in return, give you extra credit to spend. Western credit culture encourages consumers to "buy now, pay later". In China, it is "pay now, buy later".