Yoga centres under stress as banks restrict services after mass closures
Studio owners find themselves stretched as lenders reject their applications for credit card payment facilities after mass closures
Yoga studios in Hong Kong are feeling the backlash from the collapse of so many of their counterparts as banks now refuse to provide them with credit card payment facilities.
One company facing the problem is the Iyengar Yoga Centre in Sheung Wan. Because the business, established in 1999, had obtained a merchant account with Global Payments - HSBC's company that provides merchant account services - students could pay for their classes by Visa and Mastercard.
But when George Dovas took over the centre 21/2 years ago he had to transfer everything under the previous owner's name to his own.
He contacted Global Payments explaining that the business had changed hands and that he had to change the name on the merchant account.
He was stunned when told he had little chance of getting an account, given the number of yoga centres that were going out of business.
At that time, yoga centres including Planet Yoga, Yoga Limbs, Yoga Yoga, Living Yoga and Karma Yoga had closed or were in the process of doing so.
"I went through a very trying time getting someone in Global Payments to listen to me and take my application," Dovas said.
So he explored other options, calling Hang Seng Bank, Citibank, Bank of China and DBS.
But when each bank heard about the nature of his business, he was told they were not accepting any applications for companies in that industry.
It was only after protracted wrangling that Dovas finally accepted a deal with Global Payments last month, whereby Global Payments imposes a cap of 60 per cent of payments Dovas would normally receive through credit cards each month.
The Sanctuary in Central and Yogasala in North Point also had issues with credit card payment facilities. The Sanctuary cannot accept payment by credit card.
Its founder and director, Phil Davies, applied for credit card services when he opened the business in May, but was told that because the business model had forward payments - clients can book packages of multiple treatments at a discounted rate - a deposit was necessary.
The amount required, however, was huge and totally impractical, he said.
Davies said: "We inquired about using credit card facilities for one-off treatments and products only … to which the reply was 'you could just be saying that to trick us'."
He said clients were notified in advance that the Sanctuary did not accept credit card payments.
Yogasala's spokeswoman said that students must pay by bank transfer, cheque or cash as paying by credit card was too much trouble to organise.
HSBC said the bank had prudent procedures in place for evaluating and approving credit applications.
"Credit facilities are granted to customers who are able to prove their financial strength and repayment ability," a HSBC spokesman said.