ApplePay is launched in China, bringing new changes to the mobile payment industry

This article is reproduced from: China Business News Original title: "Payment changes: the "land grabbing war" between the old and the new"

As of the end of October 2015, a total of 268 institutions have obtained payment business licenses issued by the central bank. Recently, the central bank revoked the payment license of Shanghai Changgou Enterprise Service Co., Ltd. Since August 2015, three payment institutions have had their licenses revoked.

The payment industry is never short of big events. Applepay is about to be launched in China, which has been the focus of countless eyes in the past two days. How will Applepay disrupt the payment industry, and what will the payment industry look like under the competition between the new and old?

The payment industry is destined to be very lively in 2016. With the implementation of new regulations and the reshuffle of the industry, it is particularly urgent for both old payment companies and newcomers to seize territory and lay out new fronts.

Since 2015, the wind of regulation and rectification of the payment industry has quietly blown. At the end of last year, the "Administrative Measures for Internet Payment Business of Non-Bank Payment Institutions" was issued to convey clear regulatory opinions: payment institutions are encouraged to position themselves as payment channels and limit account functions.

According to the 2015 China Payment and Clearing Industry Social Responsibility Report released by the China Payment and Clearing Association, as of the end of October 2015, a total of 268 institutions had obtained payment business licenses issued by the central bank. Recently, the central bank revoked the payment license of Shanghai Changgou Enterprise Service Co., Ltd., which means that as of now, there are a total of 267 licensed payment institutions. What is worth noting is that this is the third payment institution to have its license revoked since August 2015.

The regulators are determined to rectify the payment industry, competition is becoming increasingly fierce, the landscape is evolving, and the self-discipline and transformation of payment institutions are imminent. Against this background, payment institutions are gradually adjusting their strategic layout, the position of industry leaders is further strengthened, and non-leading companies are focusing on expanding their territory in the upstream and downstream innovation fields of payment.

The payment industry is in turmoil.

Payment changes

"With the development of the Internet economy and the migration of user habits, mobile payment has increasingly become the infrastructure and core entrance of the entire Internet." Li Yaodong, director of Zero One Research Institute, told the reporter of "First Financial Daily" that previously this entrance was mainly occupied by Internet companies relying on their traffic advantages and scenario advantages, and financial institutions started relatively late.

Li Yaodong believes that large financial institutions represented by Ping An One Wallet are working hard to penetrate into mobile financial services, and they also have their own advantages, such as occupying financial scenarios, better understanding of users' financial management needs, and richer asset management experience. Relying on financial scenarios to extend to life scenarios, and Internet companies relying on life scenarios to extend to financial scenarios, have formed the "two sides of one body" of market competition. The core lies in the rapid capture and efficient satisfaction of user needs, and the realization of inclusive, personalized, intelligent and integrated financial services through scenario embedding and technological innovation. Competition in this area has just begun. Although there is a huge difference in the current market share, in terms of comprehensive mobile financial services, financial institutions and Internet companies are actually still standing on the same starting line.

Facing the changes in the industry environment, what should payment institutions pay attention to in the future? Yang Tao, assistant director of the Institute of Finance of the Chinese Academy of Social Sciences, told the reporter of China Business News: "First, standardize development and strengthen the protection and education of payment service consumers, which will help good money drive out bad money and achieve a balance between risk and efficiency; second, integration and adjustment, the industry may see more mergers and reorganizations; third, openness and competition, the competition among overseas institutions, traditional institutions and third parties is more intense, and there is also room for win-win cooperation; fourth, strategic improvement, the payment industry may have more top-level design and positioning from the national strategic level and the financial market infrastructure level; fifth, rules are more important, from the innovation boom of payment products to the construction of industry technical standards; sixth, customer-oriented and service value-added, pay more attention to the diversified needs of customers, and provide more additional services beyond payment."

At present, the domestic payment industry is a "three-legged race", with UnionPay Business, Alipay and Tenpay dividing the market.

According to the statistics of the transaction share of the comprehensive payment market of non-financial payment institutions in China in the third quarter of 2015 by Analysys, UnionPay Business, Alipay and Tenpay ranked the top three with market shares of 35.87%, 33.18% and 9.62% respectively. The rest ranked as follows: 99Bill 6.65%, Huifu Tianxia 4.81%, Tonglian Payment 3.86%, Yeepay 1.5%, Huanxun Payment 0.73%, and other payment institutions only accounted for 3.78% of the market share.

However, the mobile payment market has shown a different pattern. According to Analysys, in the third quarter of 2015, Alipay continued to occupy the first place in the mobile payment market with a market share of 71.51%; Tenpay ranked second with a market share of 15.99%, an increase of 2.91 percentage points from the previous quarter; Lakala's market share in the quarter was 6.01%, ranking third; UnionPay's mobile payment market share was only 0.49%, ranking eighth in the country. As user habits develop, the number of quarterly active users of mobile payment will continue to rise. Users will rely more on mobile payment tools in the future, and they will decide which mobile payment tool to choose based on their personal habits and specific scenarios. "

"At present, my country is developing multiple mobile payment methods in parallel," said Wang Yonghong, director of the Science and Technology Department of the People's Bank of China. "Except for some payment methods used in small-scale relatively closed environments, there are three major schools of domestic mobile payment: the first is the flash payment school, including cloud payment, Samsung payment, Apple payment, etc., as well as payment products using SIM-SWP technology by mobile operators, focusing on consolidating offline payments; the second is the QR code scanning school, that is, QR code payment, mainly including Alipay and Tenpay, two third-party payment institutions, focusing on competing for the conversion of offline transactions into online transactions; the third is the transfer school, including Alipay transfer and WeChat payment."

Land grabbing

The future prospects of payment are huge. Whether for old institutions or newcomers, payment institutions all want to get a bigger share in this blue ocean.

In recent years, China UnionPay has made great progress in its strategic layout of mobile payments. Under the new environment of the payment industry, China UnionPay has started a "second entrepreneurship" model, gradually setting off a wave of financial technology innovation.

In the field of mobile payment, China UnionPay has made frequent moves recently: On December 12, 2015, China UnionPay jointly launched UnionPay "Cloud QuickPass" with more than 20 commercial banks, developed mobile payment based on QuickPass, and officially launched a mobile payment solution based on HCE (host-based card emulation). With the pilot launch of UnionPay card small-amount password-free and signature-free service, cardholders can use QuickPass at designated merchants for payments below 300 yuan without signing or entering passwords, greatly improving the "QuickPass" experience.

On December 18, 2015, China UnionPay and Samsung Electronics announced the establishment of SamsungPay, and announced cooperation with Apple to launch ApplePay in China. UnionPay cardholders can enjoy a convenient and secure mobile payment experience by using SamsungPay or ApplePay. According to an insider who revealed to the reporter of China Business News: "ApplePay is already in the internal testing stage, and seed users can pay in McDonald's, Watsons, Starbucks, 711 supermarkets and many other stores."

In addition, China UnionPay started with simplifying the payment process and officially launched the "Modern Hospital" solution in Shanghai Zhongshan Hospital in early 2015, seamlessly integrating payment with traditional registration, diagnosis, treatment, examination, and medication collection, and began to promote it in pilots across the country. According to relevant staff of China UnionPay, it has been put into operation in nearly 30 hospitals in Shanghai, Guangdong, Zhejiang, Hebei, Anhui and other places, and has taken the lead in realizing mobile payment of medical insurance accounts in Guangdong.

Alipay, as the dominant player in the mobile payment market, has not relaxed its position for a moment. First, Alipay has improved its online scenarios by redesigning its mobile terminal, and secondly, it has expanded its offline payment scenarios by vigorously promoting it offline and signing contracts with supermarkets and convenience stores.

In the third quarter of 2015, Alipay released version 9.0, intending to build a full-scenario financial platform in the future and expand the market around "scenario". For example, Alipay provides the "city service" function in Chengdu, providing local residents with 14 convenient services including provident fund inquiries, Hong Kong, Macao and Taiwan visas, making Alipay scenarios richer.

In addition, Alipay has also made great efforts in offline promotion, such as signing a contract with RT-Mart. So far, Alipay has signed all five major supermarket brands in China. On September 23, 2015, it announced an investment of 1 billion yuan to launch the "National Store Opening" plan, saying that it would recruit 1 million "word-of-mouth customers" within 2 months and open 1 million stores.

At the same time, Alipay's tentacles are constantly extending to any field it can cover. Since January 23 this year, Alipay has joined hands with 80 brands to distribute merchant gift packages for 19 consecutive days, including insurance companies that were not often seen in the past.

According to Analysys International, in the third quarter of 2015, Tenpay's market share increased significantly and now accounts for 15.99% of the market share.

According to the unaudited third quarter financial report for the period ended September 30, 2015 released by Tencent Holdings Limited, the cumulative number of card-bound users for QQ Wallet and WeChat Pay exceeded 200 million in that quarter. The huge user base and frequent payment behaviors based on social networking have brought about a significant increase in the scale of Tenpay payments. In addition, the full opening of applications to service providers has also attracted a considerable number of small and micro merchants.

Lakala is a dark horse in the payment industry, playing a role in the layout of the symbiotic system of comprehensive Internet finance and showing its effectiveness. Last year, Lakala improved its "8+N" business segment layout for the third time, with multiple business lines such as payment, credit investigation, loans, wealth management, insurance, shopping malls, investments, and banking services working together to bring more new users to the Lakala platform. While the original convenient payment business has grown, the credit and wealth management business has increased significantly.

Based on a platform of more than 4 million merchants and 100 million individual users, as well as big data and credit reporting services, in the third quarter of last year, Lakala's credit business had a monthly transaction volume of 10 billion yuan and its wealth management transaction volume reached 3 billion yuan, becoming the main force behind the explosive growth of Lakala's mobile payment business.

"Combined" POS machine

The innovation and improvement of major payment institutions have also led to the quiet changes of other payment institutions and related upstream and downstream industries. As an important territory in payment scenarios and the main method of near-field payment, POS machines are also changing. A new type of terminal POS machine is popular in the market, which cleverly "combines" payment methods such as UnionPay payment, WeChat payment and Alipay.

According to the reporter of China Business News, POS machines are entering the era of mobile intelligence, and Internet POS machines are replacing some of the 30-year-old traditional POS machines. "In addition to bank card acceptance, payment, and transfer functions, Internet POS machines can also connect with banks, industry platforms, and third-party institutional platforms. Compared with traditional POS machines, Internet POS machines have an operation and maintenance efficiency that is more than 20 times higher, and no manual on-site maintenance is required." Beijing Weizhi Panorama Information Technology Co., Ltd. is the technical partner of Internet POS machines. Its founder and CEO Li Yan introduced it to the reporter of China Business News.

"In the information age, what we need is not a simple network of clearing connections, but a network of information connections. Data on funds, customers, orders, production capacity and service capabilities are all placed on the network, because a brand-new data information network is needed. The connection of physical merchants requires a device to transmit and connect the data on the Internet, and that is the Internet POS machine." Li Yan said.

The reporter of China Business News noted that this type of smart POS machine is also favored by other institutions. The 99Bill Super Smart POS machine and Lakala Cloud POS machine have been launched recently.

In fact, last year, Lakala launched a wristband that tried to integrate NFC payment and QR code payment in near-field payment into one wristband and APP. "Lakala has already been involved in bus cards, all NFC bank cards, and various Internet financial applications on APP." Sun Taoran, chairman of Lakala Group, said in an interview with our reporter.

Paying for “reclamation”

Not only is the layout of traditional POS machines facing a major industry reshuffle, but third-party payment institutions are also transforming and innovating.

"In the future, the opportunities for third-party payment will outweigh the risks. Returning to user value and merchant value is the only way out for third-party payment companies." Zeng Yi, deputy general manager of LianLian Pay, told the reporter of China Business News that on the one hand, the entire market is still growing explosively and the convenience of mobile is highlighted; on the other hand, after the market enters a more advanced level of supervision, companies that focus on user experience and merchant needs will be able to gain more market share, while companies that survive by violating regulations will find it difficult to survive. Eliminating violations means eliminating unfair competition. When unfair competition does not exist, the market will return to healthy development rather than the current price war. Therefore, when industry supervision is upgraded, the profits of payment companies will actually increase.

As the environment changes, there are both elimination and new births in the payment field. With the participation of JD.com, Baidu, Alipay, WeChat, UnionPay, Wanda 99Bill, Ping An One Wallet and other parties, the fierce battle of mobile payment is escalating.

As the leader of traditional finance, the layout progress of Ping An Mobile Payment has always attracted much attention from the market. In 2014, Ma Mingzhe, Chairman of Ping An of China, started the mobile payment enclosure movement with One Wallet, but due to the lack of social genes, the speed and method of One Wallet's advancement were not as smooth as the market imagined. How Ping An could find payment scenarios that could be penetrated and further expand its territory in the mobile payment market was also once a concern of the outside world.

In fact, after its initial exploration of the mobile payment market in 2014, Yi Wallet has readjusted its group strategy over the past year, starting from the financial payment scenario and gradually forming a new closed-loop payment ecosystem of "finance-payment-transaction-social mobility".

While new faces are entering the industry, veterans in the payment industry are exploring transformation.

It is good to lean on a big tree for shade. 99Bill is gradually abandoning the single third-party payment institution business. Currently, as an Internet financial company under Wanda Group, 99Bill is constantly expanding the business model of new finance. Wanda Group has been working hard to develop in the fields of e-commerce and O2O, and financial services are an important value provided to users.

A relevant person in charge of 99Bill told the reporter of China Business News that in 2016, 99Bill will focus on serving users and merchants in Wanda's diversified scene clusters first, and the second step is to radiate to more scenes. "From a business perspective, we are extending from payment to Internet finance. Payment is like the power grid. After it is connected, what kind of electrical appliances are connected to it is the most direct value to users."

In 2015, Huifu Tianxia focused on three areas: financial payment, wealth management platform, and account custody, gradually improving the system of comprehensive financial services, and also completed the transformation and upgrading from a third-party payment company to a new financial services group.

"In 2016, Huifu will continue to focus on infrastructure services and wealth management for new financial institutions." A relevant person in charge of Huifu told our reporter that the focus of Huifu's development in 2016 will be on the two platforms of "Account+" and "Wealth Management+". By combining its own third-party payment business characteristics, it will build a more complete "Account+" platform with financial accounts, operational risk control, data management, and payment settlement as its main business content, and "Wealth Management+" platform with full products, full transactions, and full industry chain as its characteristics, to fully serve enterprises in the new financial ecosystem.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.