With the development of credit card business, the frequency of credit card risks is getting higher and higher, and the losses are getting bigger and bigger. Therefore, credit card risk management is particularly important. Credit card risk management measures generally include risk avoidance, risk prevention, risk decentralized transfer and risk compensation afterwards. In order to obtain the best risk control effect at a lower cost before the credit card risk occurs and ensure the stable operation of the card issuer after the risk occurs, the card issuer should make the right choice on the basis of analyzing the costs and benefits of various risk management methods, avoid or reduce the credit card risk as much as possible, and realize the steady growth of the card issuer's operation. Keywords: credit card; Credit card risk; Risk management; Function; economic analysis

First of all, the questions raised

Since the first credit card (BOC card) was issued by Bank of China Zhujiang Branch in June 1985, China's bank card business has developed rapidly. Card-issuing banks, the number of cards issued and the transaction amount have all increased greatly; The use environment of credit cards has also been greatly improved. Take Shanghai as an example. By the end of 2002, the total number of bank cards issued in the city reached 35.65 million, an increase of 27.5% over the previous year. The number of bank card transactions was107.5 million, and the total transaction amount was106.5 billion yuan, and 3282 ATMs and POS16938 POSS were deployed. In 2002, the number of online merchants of bank cards increased from 2 184 at the beginning of the year to 5,780, and16,234 POS were connected to the Internet. The total transaction volume of ATM and POS in the whole year was 565,438+085.72. According to conservative estimates, by 2007, the total investment in the construction of Shanghai Bank Card Industrial Park will exceed 654.38+0 billion yuan, the total annual output value will reach more than 20 billion yuan, and the number of employees will reach about 30,000. Credit card business has become one of the most profitable departments of commercial banks. In western developed countries, credit card business is the main business and main profit source of many large international banks. For example, Citibank's credit card business accounts for one-third of its total profits, and American Express's American Express card business accounts for 70% of its total profits. However, with the further development of credit card business, credit card risks occur more and more frequently. There may be risks in the issuance, use and settlement of credit cards. Moreover, with the increase of issuers, special merchants and cardholders, credit card risks are characterized by wide coverage, diverse types of risks and great harm. The profit of the issuing bank is gradually decreasing. In most cases, these losses are made up by the profits of banks. Therefore, it is particularly necessary to manage the credit card risk. At present, there are many methods for risk management of card-issuing banks, but under what circumstances can we effectively reduce the operating costs of banks and increase their income? The author wants to analyze the cost and benefit of credit card risk management means from the perspective of economics, and provide reference for bank risk managers to make decisions.

Second, the necessity and role of credit card risk management

As the occurrence of credit card business risks has the characteristics of wide coverage, various types and great harm, strengthening credit card risk management plays an important role for card issuers. It is necessary to strengthen credit card risk management, whether before or after credit card risk occurs. In my opinion, strengthening credit card risk management is of great significance to society, credit card parties, especially card-issuing banks. 1. We know that one of the main reasons for credit card risk is caused by the issuing bank itself. The loopholes in the card issuer's own operation provide many opportunities for credit card criminals, which leads to risks. Strengthening credit card risk management can effectively promote the card-issuing bank business personnel to operate according to law and prevent the occurrence of illegal acts; Improve the professional level of the staff of the issuing bank and the ability to safeguard the rights and interests of the issuing bank; Banks can be urged to establish a standardized and effective credit card risk prevention mechanism, so that the credit card risk prevention work of the entire issuing bank can be carried out in an orderly manner. 2. Strengthening credit card risk management is the need to safeguard the bank's own economic interests. The occurrence of risks greatly increases the operating costs of banks, thus affecting the increase of bank profits. If the risk of credit card can be effectively managed, banks can find the most economical and feasible management method to avoid or reduce the risk by scientifically analyzing the cost of risk management, so as to minimize the risk loss and realize the steady growth of the income of card issuers. 3. Strengthening credit card risk management can maintain the bank's own image, thus creating a good credit card environment and achieving the best social benefits. Banks with low risk rate can naturally leave a good impression on the public, and banks provide a lot of convenience for the general public while expanding their business. Card-issuing banks follow the rules, and there are more and more special merchants who do not violate the rules. Coupled with the adoption of modern technology, the number and security of cardholders can be enhanced, and the card-using environment of the whole society will be significantly improved. 4. Strengthening credit card risk management is also the need to safeguard the interests of special merchants and cardholders. Another major cause of credit card risk is the illegal operation and negligence of special merchants and the cardholder's failure to use the credit card according to the regulations. In the process of strengthening risk management, card issuers pay attention to the training of special merchants and publicize the common sense of using cards to the general public, which is of great significance to reduce the occurrence of risks and safeguard the interests of special merchants and cardholders.

Third, the economic analysis of credit card risk management

(I) Cost and Benefit Analysis of Credit Card Risk Management Credit card risk management refers to the behavior that card issuers effectively control and deal with credit card risks on the basis of identification and analysis in the process of credit card business operation, so as to achieve maximum security at the lowest cost, that is, the most economical and reasonable method. "Risk managers prepare for possible risks in the most economical way and apply the most appropriate and best technical means to reduce management costs. ..... to achieve maximum security and the best risk control effect through the lowest possible management cost. In short, only by paying attention to the analysis of various benefits and expenses and strictly accounting for costs and expenses can we achieve this goal. " The purpose of credit card risk management is to avoid possible losses and maximize profits. However, in the actual management process, the issuing bank often needs to pay a certain price, which is the cost of financial risk management. The cost of credit card risk management is mainly reflected in its execution cost, opportunity cost, reputation cost and risk cost. 1. Execution cost. Execution cost refers to the inevitable cost that card issuers must spend to manage credit card risks. Without the necessary investment, it is difficult to prevent credit card risks. For example, banks need to pay insurance premiums and use advanced equipment to prevent risks. For example, banks have to pay a lot of manpower, material resources and financial resources to determine the credit status of credit card applicants. 2. Opportunity cost. Opportunity cost is the cost that card issuers should consider, which means that card issuers invest in credit card risk prevention, thus losing the income generated by investing this money in other businesses. In practice, some banks are unwilling or unable to invest a lot of money to improve software and hardware facilities. 3. Reputation cost. Bank image is an important part of the competition of modern commercial banks. Creating a good bank image is not only the need for banks to survive and develop in the competition, but also one of the effective measures to avoid reputation risk. The higher the overall evaluation of banks by society, the higher the confidence in banks, which is conducive to the development of banking business. If credit card risks of card issuers occur frequently, it will naturally affect the cost and profit of credit card business, the overall image of banks and the development of other businesses. 4. Risk cost. In credit card risk management, the issuing bank may manage the financial risks they face through other derivative financial instruments, but this financial instrument itself may trigger new credit risks. In addition, banks sometimes have to consider short-term costs and long-term social costs in credit card risk management. What we should see is that different strategies have different costs. If we abandon the cases of giving up unexpected gains, people may not have to pay any cost when adopting some financial risk management strategies, such as avoiding risks. Of course, in real life, not every financial risk can be prevented; On the contrary, most financial risks occur because they cannot be prevented. Different prevention strategies have different costs, and people can manage risks at a lower cost by choosing appropriate strategies. Therefore, when choosing management methods, one of the first factors that people should consider is to reduce the cost of financial risk management as much as possible under the condition of ensuring the efficiency of financial risk management. On the other hand, we should consider the efficiency and effectiveness of risk management. The so-called efficiency refers to the extent to which you can reduce or eliminate the financial risks you face by taking certain risk management measures. Sometimes we only pursue efficiency, but efficiency and cost are often directly proportional. Therefore, it is necessary to correctly estimate its costs and benefits in order to realize the net costs or benefits of various alternative strategies. Income is the income or possible loss that can be avoided by taking certain risk management measures. In general, people should try to choose those strategies that can avoid possible losses and guarantee unexpected benefits. The cost and benefit of risk management is only a possible input and output to a great extent, which has a great influence on the cost and benefit with the change of various factors and the accuracy of the estimation results. The following is a concrete economic analysis of some commonly used risk management methods.

(2) Specific analysis of credit card risk management means 1. Risk Avoidance Risk Avoidance means that the card issuer consciously takes evasive measures to abandon or reject a certain business because it finds that engaging in a certain business activity may bring risk losses. That is to say, on the basis of analyzing the possible losses caused by risks in this business and the gains that can be obtained by taking such risks, the card issuer thinks that the gains are less than the losses and avoids them. It can be said that this is the simplest risk management method. For example, in the process of applying for a credit card, it is difficult for the card issuer to conduct a comprehensive investigation on the applicant's credit status, and it is also difficult to be sure of the authenticity of the information provided by the applicant, so it is a risk aversion to voluntarily refuse to issue a credit card to the applicant in order to avoid future risks. Risk avoidance measures are clean and neat, and the issuing bank does not need to worry about the possibility of future risks, that is, the cost is very small or even zero. But we must see that zero cost is accompanied by zero income. Because you give up or refuse a business, you will also give up the income that may be brought by engaging in this business. A commercial bank is an enterprise legal person, and should take "three natures" as its operating principle (especially for profit, without which there is no vitality. Moreover, at present, the profitability of credit card business is relatively high, and domestic major banks are competing to develop credit card business. If you often take the risk-averse approach, it will have a great impact on his business development and it is difficult to compete with other banks. Therefore, although avoiding risks is extremely effective, it is very uneconomical. While keeping risks out, we also keep interests out. Therefore, it is an expedient measure to avoid the passive defensive nature. Banks can't give up eating because of choking, regardless of the risk. 2. Risk prevention strategy means that the card issuer takes certain preventive measures in advance to reduce or reduce the possibility of credit card risks before they occur. The biggest difference between prevention strategy and evasion strategy is that it is a proactive strategy, and banks take the initiative to reduce the number of risks and the scale of losses by taking measures. At present, the means of risk prevention generally include cardholder risk prevention, special merchant risk prevention, card issuer internal risk prevention and credit card fraud risk prevention. Compared with other credit card risk strategic means, prevention has the advantages of safety, reliability, low cost and good social effect. What is particularly worthy of recognition is that it can effectively nip in the bud and truly achieve the purpose of "combining prevention with elimination". If the preventive measures are done well, the probability of illegal credit card activities will be greatly reduced, which can prevent the occurrence of risks from the source and reduce the probability of risks. Of course, we should also pay attention to how to face risks correctly. Because risk is not equal to loss, some risks may not really happen. We should weigh the ratio of risk and possible income, and make sure that the income exceeds the loss caused by risk, and do it boldly. In practice, banks can take many preventive measures, such as strengthening the training of special merchants, guiding cardholders to use their cards, and strengthening the management of overdraft loss reporting. Here, only the management of overdraft and loss reporting and stop payment is analyzed in detail. (1) Overdraft risk management. "Credit card overdraft is essentially a loan issued by the issuing bank, but unlike other loans, it is generally formed and discovered in the process of payment settlement and authorization." Credit card overdraft can be divided into goodwill overdraft and malicious overdraft. Goodwill overdraft is a normal overdraft, and generally there is not much risk. Malicious overdraft refers to the overdraft behavior of the cardholder for the purpose of illegal possession, which exceeds the prescribed limit or time limit and is invalid after being collected by the issuing bank. The loss caused by malicious overdraft directly constitutes the cost of credit card business. In particular, the development of electronic means in China is lagging behind, the transmission speed of stop payment bills is slow, the automatic authorization equipment is imperfect, the loopholes in business management departments and the lax review of special merchants are causing more and more malicious overdrafts and increasing losses. But can you be afraid of overdraft business because malicious overdraft will cause great losses? Let's analyze it. Article 23 of the Measures for the Administration of Bank Card Business stipulates that credit card overdrafts will be compounded monthly, and quasi-credit card overdrafts will receive simple interest monthly. The overdraft interest rate is 0.5 ‰ of the daily interest rate, which will be adjusted according to the current interest rate adjustment of the People's Bank of China. It can be seen that the interest rate of credit card overdraft is very high. The income sources of credit card business mainly include cardholder's annual fee, information exchange income, interest income and other expenses and income, among which interest income accounts for the largest proportion (overdraft interest income of many foreign banks accounts for 80% of all credit card business income). By comparison, we can easily find that the development of overdraft business is beneficial to the issuing bank, even if overdraft risk does exist. Therefore, it is not easy to cancel the overdraft function of customers' credit cards. The key is to correctly distinguish between reasonable overdraft and malicious overdraft. We should try our best to increase the number of reasonable overdrafts and reduce or even eliminate the number of malicious overdrafts. In practice, we should establish a correct concept of risk (in a sense, it is a big risk and a big profit), take risk management as a way to maximize profits, strengthen the management of credit card overdraft, do not engage in agreed overdraft according to the relevant regulations of the central bank on credit card business, minimize the settlement links of credit card transaction funds, and improve the settlement speed, so as to timely calculate the credit card overdraft and ensure the normal income of banks. ((2) Risk management of loss reporting and payment stopping. Credit card stop payment is an act that the issuing bank carries out to protect the interests of the cardholder and the issuing bank due to loss reporting, theft, malicious overdraft, violation of the credit card regulations and other reasons. Stopping payment can improve the capital security of the issuing bank and the cardholder, and effectively reduce the credit card risk. In practice, it is easy to have disputes about the determination of the time to report the loss and the risk responsibility after stopping payment. It is of great significance for risk liability to determine the time to stop paying the loss. Paragraph 5 of Article 52 of the Measures for the Administration of Bank Card Business stipulates that the issuing bank shall provide cardholders with the service of reporting the loss of bank cards, and shall set up a 24-hour service telephone to report the loss by telephone or in writing, with the written loss as the formal way. And in the articles of association or related agreements, the responsibility for reporting the loss between the issuing bank and the cardholder is clearly stipulated. Because there is no uniform regulation, each card issuer has its own regulations on the time and responsibility of reporting loss and stopping payment. For the loss before the loss is reported and payment is stopped, the articles of association of each issuing bank stipulate that the cardholder shall bear the loss. However, there are different regulations on the risk after loss reporting. According to the credit card regulations issued by domestic banks (see General Theory of Credit Card Business Management edited by Wang Zhengzhong, People's Publishing House 1996), the risk liability is mainly determined at the time of loss reporting, 24 hours after loss reporting, 24 hours after loss reporting and 36 hours after loss reporting. ((So, is it necessarily beneficial for the bank to stipulate that the risk liability shall be borne by the cardholder for a period of time after the loss is reported? It is true that such a provision of the issuing bank can reduce the resulting risk losses and reduce operating costs. But from an economic point of view, this is not in line with the purpose of maximizing interests. According to the empirical economic analysis of the law, "the loss must be allocated to the party who can bear the risk of such loss at the lowest cost." ((that is, we must first judge the cost of each party's prediction and prevention of this risk, and then decide the party that spends less to bear this risk and responsibility. From both the cardholder and the issuing bank, there is no doubt that the issuing bank is the easiest to predict and prevent this risk. When issuing this service, the issuing bank should foresee the risk of easy loss and fraudulent use of credit cards, and only the issuing bank can effectively prevent the fraudulent use of credit cards. Furthermore, even if a loss does occur, the issuing bank can transfer the risk by applying for insurance with an insurance company, thus effectively avoiding the resulting loss, which is difficult for cardholders to do. It can be seen that the risk cost of the issuing bank in preventing loss reporting is obviously lower. In addition, in practice, it is doubtful whether the dispute can be supported by the court. In addition, the domestic credit card business is booming. If the issuing bank decisively bears the risk of loss caused by loss reporting, it can effectively attract customers and develop special merchants, which is of great significance to establishing a good bank image. The practice of SDB is undoubtedly forward-looking. 3. Decentralized risk transfer. Decentralized transfer method is a common method in credit card risk management. This way refers to a strategy that the issuing bank distributes the credit card risks it faces to other economic entities through some legal trading methods or business means. The objects of risk transfer are generally guarantors, cardholders and insurance companies. However, we should clearly see that an important feature of this strategy is that the decentralized transfer of risks must be based on someone's assumption. It is for this reason that decentralized transfer should be legal. Risk transfer should be analyzed on a case-by-case basis, with different costs and different benefits. Only on the basis of scientific analysis can we use them correctly. (1) to the guarantor. In the actual operation process, the card issuer will ask the applicant to provide a guarantor or unit to clarify their respective rights and obligations on the basis of signing the agreement. When the cardholder fails to perform the debt, the guarantor shall bear the responsibility, thus transferring the risk to the guarantor. However, the time, amount and scope of the guarantor's liability are often controversial, especially when the cardholder overdraws maliciously. Some issuing banks stipulate that the guarantor must bear all the overdraft amount from the date of determining the guarantee, which is debatable. Although the guarantor has signed a contract with the card issuer and is willing to bear the cardholder's responsibility for payment, this does not mean that the guarantor is willing to bear all the losses caused by malicious overdraft, especially the losses after the credit card is fraudulently reported for loss, because this amount is difficult to determine. Because of this, some scholars in our country suggest that the guarantor should bear the greatest guarantee responsibility. Some scholars believe that the responsibility should be allocated according to whether the bank can technically prevent and stop malicious overdraft. ((We don't discuss whether the practices of card issuers conform to the provisions of the contract law and whether they will be supported by court decisions in practice. At least such a provision will damage the enthusiasm of the guarantor and even the social image of the card issuer, which will undoubtedly have a negative impact on the development of the guarantee business. Therefore, the bank issuing bank should pay attention to how to design the time, amount and scope of the guarantor's guarantee responsibility, which is the most economical, less costly and more profitable. (2) Transfer money to the cardholder. For example, in the process of applying for a credit card, the applicant is required to apply for a credit card from the bank by means of certificates of deposit, securities mortgage or pledge, and the applicant is required to pay a certain deposit. In addition, there are also common methods to transfer the risk to the cardholder as much as possible through the management of overdraft account and the way of reporting the loss and stopping payment. (3) Transfer to an insurance institution. This refers to a form in which the card issuer applies for insurance with an insurance company, and when the risk loss occurs, the insurance company makes compensation, so as to avoid or reduce the actual loss. As a risk management strategy, insurance has a long history in financial risk management. As early as the 1930s, after the Great Depression, the United States began the deposit insurance system. Nowadays, it is more and more used in credit card risk management, which is an important means to spread risks and compensate losses. Card issuers can get timely and satisfactory compensation for some unexpected losses in credit card business through a small amount of premium expenditure, thus reducing or reducing risks, which is very economical for card issuers. What we should pay attention to here is the risk loss division, insurance period, premium and insurance liability of insurance companies. 4. Risk compensation. The so-called credit card risk compensation means that the issuing bank seeks partial or full compensation for the financial risk losses that have occurred or will occur through certain channels, so as to reduce or avoid the credit card risk losses. The common method is to establish a risk reserve system, that is, the card issuing and payment stopping institutions take the initiative to incorporate credit card risks into their daily management during the credit card business, regularly extract a certain proportion from the profits obtained from the credit card business to establish a risk reserve, and manage the reserve in a special account to make up for risk losses or bad debts, and turn the balance into profits. In practice, some losses are inevitable, and the issuing bank should bear this responsibility. The establishment of risk reserve system can effectively deal with this kind of risk loss. Moreover, this method does not cost much, especially it can be used in conjunction with the above measures such as prevention and decentralized transfer. After credit card overdraft is included in loan management, it can be written off when other risk management methods are ineffective. ((((

Fourth, some suggestions.

Through the above economic analysis of credit card risk management, we can see that credit card risk management departments should pay special attention to risk prevention and formulate strict risk management rules and regulations; Attention should be paid to the training of business personnel and special merchants, especially to strengthen the internal management of card issuers. In the process of credit card application, customers are required to deposit reserve funds and provide guarantees. It is necessary to strengthen the management of overdraft loss reporting and stop payment, formulate reasonable operating rules for overdraft loss reporting and stop payment, strengthen contact with insurance institutions, and try to insure with insurance institutions. At the same time, we should establish a correct risk awareness and establish a risk reserve account. If you are really not sure, take the risk avoidance strategy decisively. In a word, the purpose of credit card risk management is to effectively reduce costs and increase income.

This article is for reference only. ...