Pay-per-service model makes comeback

Customers are increasingly realizing how buying a prepaid card can end up as paying money for nothing

By Yang Zekun | China Daily | Updated: 2024-05-03 08:34
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Hairstylists serve customers at a hair salon in Beijing on Feb 21, 2023. CHINA DAILY

To his dismay, he had to queue up like everyone else. He argued multiple times with the staff members, but all they could say was that everyone had to wait because they were all registered members.

He spent the entire morning at the salon, realizing that the so-called membership was a joke, and all supposed member benefits nonexistent.

Later that day he heard from his colleague, whose haircut at a street-corner barber shop cost him just 15 yuan.

The decent haircut his colleague got, and the fact that several branches of the branded salon he went to shut shop over the year, further cemented his decision to switch to these more affordable establishments once he had exhausted his prepaid card balance.

Over time he tried haircuts, perms and dyeing at various branches of the salon, only to find out that the costs remained high even after the "discount" and his balance was getting depleted quickly.

He also noticed some strange aspects, such as the hairstylists were being hired randomly and quitting or being asked to leave suddenly, the hairstylists' fees were unilaterally determined with there being no way for customers to check if they were indeed "store directors", "chief hairstylists", or "store managers".

Almost every time he got his hair done, while checking out, he would be told of an ongoing promotion or celebration — everything said with the intention of making him recharge his prepaid card.

One time a staff member, after scrutinizing his receipt, told him, "You don't have much balance left on your card — how about topping it up?"

"These imperfect services and the poor attitude of the staff are one of the main reasons I stopped using such prepaid card services. Moreover, after several visits to affordable hair salons and convenient barber spots in the parks, I found myself enjoying this style where everyone queues up conscientiously and casually chats with each other, and the price is also very affordable," he said.

"I think this shift in consumption habit is largely because of a change in my own mindset, and I really like this change."

Risks identified

Zhai Yisen, 30, works for a public relations firm in Beijing's Chaoyang district and is a fitness freak. When he was 26, he spent 4,500 yuan on the annual membership card of a multi-branch gym.

In the following years, he switched between different branches, purchasing annual or monthly memberships.

However, soon his job required him to travel between cities or work overtime, because of which his visits to the gym decreased. After his membership expired earlier this year, Zhai decided not to renew it.

"There was a period when I was away on business trips for nearly four months a year. The card was hardly used during that period. I felt like I was wasting money. I didn't recharge it this year, as two of the gyms I used to go to have shut down. Friends who also used the gym are complaining about not being able to use up the money on their cards or get a refund," he said.

According to the "2022 China Fitness Industry Report" published by GymSquare, "pay-pervisit" has risen to become the second-largest payment method in the fitness industry at 36 percent, just behind long-term payment models of over a year.

The higher an individual's monthly income, the more likely they are to prefer pay-per-visit options.

Besides, in February last year, the China Consumers Association released the analysis of complaints handled by national consumers associations in 2022, showing that "shutdown" disputes caused significant consumer losses.

Closures or deliberate scams by fitness centers, cinemas, and educational institutions led to strong consumer dissatisfaction.

Such membership cards are essentially a form of prepaid consumption, Zhai said.

Businesses attract consumers to park their money with them by offering them discounts.

This allows businesses to alleviate cash flow pressures. However, while consumers receive discounts, they also face risks.

In fact, in the fitness industry, where prepaid cards and memberships are common, consumers' interests remain unprotected, as problems arise and they are left with no recourse.

When buying such prepaid packages, the establishments often offer significant discounts to lure them into buying longer duration membership.

Sometimes, when selling memberships, the cost of an annual membership is only slightly more than a six-month membership, enticing consumers with this "cost-effectiveness" while overlooking potential risks, he said.

Zhai said fitness freaks like him have become smarter now, not falling for glib-talking salespersons who try to lure them into buying any package.

"I think most young people are now careful, choosing products that offer better value for money. Once the content promoted in advertisements is found to be unrealistic, it tends to be quickly abandoned," he said.

"These changes have become quite apparent nowadays. After all, finding a job and earning money is not easy these days. Besides meeting basic needs, other upgraded consumption is just an optional choice."

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