"My God, it's ten years ahead of schedule, Old Ma is amazing!" Huang He spent an hour finally figuring out this "Youqianhua."
It was actually quite easy to understand; it was just Huabei from the future.
Except it was ten years early, a primitive... no, it should be called a modified version of Huabei.
Similar to Huabei, users didn't have to pay directly. Youqianhua paid for everything, and then it would be settled a month later.
Of course, the process to activate Youqianhua was more troublesome. Since mobile phones weren't widespread yet and IDs were easily forged, Youqianhua couldn't be directly activated at this time. Users needed to go to HSBC banks nationwide, as well as Agricultural Bank and Construction Bank branches that cooperated with HSBC, to open a dedicated online banking debit card. Then, they could use online banking to activate Youqianhua, which would basically ensure the accuracy of personal information and the security of funds.
Up to this point, Youqianhua was the same as Huabei, with no differences.
But then, the changes began.
First, Huabei had no interest if used within the same month.
But Youqianhua was different; interest was charged from the moment Youqianhua was first used. The daily interest rate was not high, only 2/10,000, while Huabei's future daily interest rate was 4/10,000.
This sounded quite good, but if converted to an annual rate, it became a 7.3% annual interest rate, which was higher than most bank loans.
From this point on, Youqianhua essentially became a loan business, whereas Huabei at least waited a month before becoming a loan.
At the same time, Huabei required repayment every month, and if the full amount couldn't be paid, there was a minimum payment option.
But Youqianhua was different. With Youqianhua, you could repay whenever you wanted within a year, and there would be no debt collection in between. Only after a year would the bank come looking for you to collect a minimum payment of 10%.
Furthermore, according to the sixty-four-page electronic financial contract hidden in a corner, if the 10% minimum payment could not be repaid within a year, the bank would have the right to liquidate your personal assets directly.
At best, it would freeze your personal assets; at worst, it would directly auction off cars, houses, and other properties. In any case, the rules were the same as normal bank loan liquidations.
"How ruthless!" After reading the specific rules of Youqianhua, Boss Huang couldn't help but shiver.
In his past life, Huang He had a dual view of Huabei. On one hand, he admitted that Huabei was indeed convenient and could help users who were temporarily short on cash purchase essential products, having a positive significance.
But Huabei also had a negative side: it amplified users' desire for consumption. The simplest logic was that before Huabei, if you didn't have money in your card, even if you really liked something and it wasn't a necessity for life, you might suppress your desire to consume, and after a while, you would forget about it.
But with Huabei, even if you were penniless, with just a click of your finger, you could buy, buy, buy. Everything came so easily and effortlessly. It was only when you faced the Huabei bill, which was several times your monthly salary, that you would feel immense dread.
Next, it would be relying on parents, finding ways to get money from them to repay the debt.
This was actually considered good. The worst was not wanting to trouble parents, or parents being even poorer, so you could only borrow money to pay off existing debts, eventually falling into despair.
Of course, Huabei was still somewhat restrained in this regard, mandating monthly payments, at least allowing users to calmly look at their bills after a month.
But Youqianhua in this world had a time limit of up to a year. This meant that you wouldn't be bothered by debt within a year, and you could even ignore the Youqianhua page.
It wasn't until a year later, when a bill of tens of thousands, or even hundreds of thousands, arrived, that you would feel immense fear and realize how much you had done in that year.
Thus, the destructive power of Youqianhua was several times greater than that of Huabei, reaching the same level as the highly criticized small loan companies in later generations, or rather, these two things were essentially the same.
Especially those who used Youqianhua were generally students, wage earners, and even some low-income groups.
After all, wealthy people had no need to use Youqianhua; they could just use cash.
Only these low-income groups were short of cash, then tempted by consumerism, and ultimately took money from Youqianhua without limit.
Some people might ask, are banks foolish for lending money to the poor, aren't they afraid that the poor won't be able to repay?
Banks are certainly not foolish, otherwise, there wouldn't be so many small loan companies lending money to young students and low-income groups without hesitation in later generations?
They are not financial institutions like banks that can afford losses; they are private enterprises, and private individuals have to bear the losses of funds. Only if this industry has huge profits will there be a large influx of private capital.
The fundamental reason Youqianhua is not afraid of losses is that they can get back the money lent out at a multiple of the original amount.
Because for most poor people in this world, they might just be short of cash, but they still own real estate. For example, their parents' savings, inherited land, houses allocated by the factory, or old houses waiting to be demolished, these are things that poor people are reluctant to cash out in normal times and cannot cash out.
Once the loan defaults, they can forcibly cash them out and even acquire them at a very low price, which is simply a highly profitable business.
Otherwise, you wouldn't see so many news reports about parents selling houses to help their children repay loans of several million yuan.
Of course, there are definitely some people among this group who are truly poor and have no real estate at all, but these people are not worried. This is because banks have an audit mechanism, and extremely poor people don't even qualify to open Youqianhua.
Secondly, Youqianhua also has a spending limit. For cards opened with an ID, the limit is only around 5,000 yuan.
Of course, in this era, there is no credit score to evaluate your credit and determine the Huabei limit. However, you can prove your financial strength through your salary statements, property deeds, etc., and then increase the limit.
This way, even if they are tricked out of money by the poor, the amount is very small, and it's acceptable to write it off. After all, such people might be less than 1%, and compared to the profits earned from the other 99%, this 1% loss is insignificant.
Not only that, but Huang He soon discovered that within Ali Wallet, there was also a brand new service called "Money-Making Treasure."
As the name suggests, this is a tool for making money.
Huang He studied Money-Making Treasure again and was even more dumbfounded.
This Money-Making Treasure was similar to Yu'e Bao in later generations. It also encouraged users to deposit funds into Money-Making Treasure, and Money-Making Treasure would give fixed interest daily. Converted to an annualized rate of return, it was 2.3680% [ps "This is Yu'e Bao's 7-day annualized rate of return as of November 5, 2021"].
Well, lending at a 7.3% annualized rate of return and absorbing savings at a 2.368% annualized rate of return, there is a pure profit of up to 5% in the gap.
What's even better is that after Huang He carefully read the entire rule set for Money-Making Treasure, he discovered that Money-Making Treasure and Youqianhua were linked.
The money raised by Money-Making Treasure was provided for Youqianhua consumption, and the interest earned by Youqianhua was used to pay interest to Money-Making Treasure. At the same time, Money-Making Treasure had a very complex interest formula calculation, which would not be detailed here.
In short, according to the results calculated by professional people later by Huang He, 30% of all interest earned by Youqianhua was the interest for all Money-Making Treasure users.
At the same time, Money-Making Treasure was in principle a fund product, and there was no guarantee of profit, and losses were allowed.
If the bad debt rate of Youqianhua exceeded the income rate of Money-Making Treasure in the future, Money-Making Treasure itself would start to lose money. This was permitted by laws and regulations because financial products inherently carried risks.
After all, if you buy crude oil futures, you might even have to pay money to the bank later, which is the most damaging.
In summary, Money-Making Treasure and Youqianhua formed a mutual relationship of borrowing and absorbing deposits. Perhaps in the early stages, banks, the "Forty Thieves" (likely referring to a financial group), and fund companies would have to subsidize Youqianhua with some money. Once Money-Making Treasure absorbed a large amount of funds, it could fully supply the funding needs of Youqianhua.
Of course, the initial startup capital was borrowed, and Youqianhua would have to pay interest to these financial institutions in the future.
In other words, if Old Ma's plan worked, a perfect closed-loop of funds would be formed in the future, and within this closed-loop of funds, Old Ma and the financial institutions behind him could continuously harvest 5% of the funds as their interest, without paying any capital costs, which was simply a highly profitable business.
Boss Huang couldn't help but exclaim "Good heavens!" after understanding these matters.
"Has Old Ma gone mad? Is he not afraid of a potential collapse by doing such a dangerous thing?" After figuring out the secret of Youqianhua, Huang He was dumbfounded. He never expected that the esteemed Old Ma would have no bottom line to this extent.
Yes, this was a very perfect financial product. Users lent their money to other users, while the controllers behind the scenes could continuously siphon blood from it and enjoy enormous financial benefits.
Assuming Youqianhua reached the scale of Huabei in the future, with annual lending reaching 800 billion yuan, the interest group behind it could directly siphon 40 billion yuan from it.
Not only that, but with the dual siphoning of Yu'e Bao, this figure could reach 80 billion yuan. Then, after packaging it in the financial market and using repeated stacking, the profits could reach 200-300 billion yuan.
This was not the most ingenious part. The most ingenious part was that if this cycle collapsed, and the bad debt rate of Youqianhua made it impossible for Money-Making Treasure to pay, and all funds were lost, then it would be the investors who lost their money. Old Ma and other financial institutions would not lose a single cent, nor would they lose any of the interest earned.
Was there any more perfect financial product in the world?