Recently, WeChat and Alipay have successively announced the progress of promoting interconnection with UnionPay Cloud FlashPay. This marks that barriers between payment institutions are gradually "breaking the ice".
At present, Alipay has opened up online scenes to UnionPay Cloud FlashPay, covering 85% of Taobao merchants in the first batch. Alipay staff told the Economic Daily reporter that it is expected that Alipay and UnionPay Cloud Flash Payment will achieve mutual recognition of the national collection code scan code in March next year. WeChat also issued a statement saying that WeChat Pay has achieved offline barcode mutual recognition and mutual scanning with UnionPay Cloud Flash Pay, UnionPay Cloud Flash Pay fully supports Q Coin, QQ Music and Tencent Video recharge services, and WeChat Mini Program also gradually supports Cloud Flash Pay.
Breaking down barriers is inevitable
In recent years, there has been a barrier between different payment institutions. Previously, the QR code payment service market was more chaotic, offline mutually exclusive competitors' payment services, online different platforms of app also showed a state of separation, other platforms of payment services are not optional. Nowadays, in shopping malls or restaurants, it is normal to place multiple QR codes in the cash register.
"Platform companies naturally have a winner-take-all attribute." Yi Gang, president of Chinese Min Bank, said that market monopoly will reduce innovation efficiency, and some domestic platform companies will seize the market through cross-subsidies and other ways, and implement exclusivity policies after obtaining a dominant market position, such as excluding competitors from entering the platform and providing services, and the two-dimensional code payment business only supports relevant App scan code payment within the technology group.
For the chaos in the payment market, Fan Yifei, vice president of the Chinese Minmin Bank, also expressed concern, "Some payment institutions use unfair competition methods such as low-price dumping and cross-subsidies to seize market share, monopolize users, traffic, data, and restrict competition from other institutions." In the long run, it will not only be detrimental to its own innovation, but also disrupt the market order, suppress industrial innovation, and then weaken the overall leading edge of China's electronic payment."
"The mutual division of platforms will lead to the fragmentation of a series of elements such as information, funds, personnel and data." Wang Pengbo, a senior analyst in the financial industry at Broadcom Analysis, said that this division has spawned many problems, such as the platform requires merchants or users to make a choice, and merchants and consumers are faced with a situation of "two choices one" or even "multiple choices", which will undoubtedly significantly increase the cost of merchants, is disrespectful to the user's right to choose, and will hinder enterprise innovation.
Fan Yifei listed a set of data: the EUROPEAN Union released research and development expenditure last year, in the top 50 global enterprises, Ali and Tencent ranked 26th and 46th respectively, far lower than google and Microsoft companies in the United States. "Compared with international technology giants, the research and development of China's large technology companies is mostly concentrated in the application field, including large financial technology companies, with insufficient basic technological innovation and less investment in research and development."
The era of payment interconnection is coming
With the advent of the era of payment interconnection, it will become inevitable for payment institutions to break down barriers and open payment interfaces to each other. "The interconnection of the payment industry is not only a regulatory requirement, but also an inevitable choice for the development of the industry to the current stage." Wang Pengbo believes that the division of the payment industry will not only hinder the innovation of small and medium-sized enterprises and the changes that the industry should have, but also increase the circulation cost of the industry, contrary to the original intention and original intention of the Internet, and must strive to promote the reform of the payment industry itself.
"The era of payment interconnection is coming." Su Xiaorui, a senior analyst at Analysys, believes that Alipay and WeChat have opened up payment scenarios to UnionPay Cloud FlashPay respectively, which means that external payment methods have begun to enter the ecology of these "giants", which will help break the payment monopoly and promote full competition in the payment market.
For the direction of interconnection of the payment industry, financial regulators have set the tone. Fan Yifei stressed that it is necessary to focus on fair competition and promote the orderly opening of payment interfaces by platform enterprises, not only considering a certain institution, but also truly opening up to all payment institutions, and strictly prohibiting exclusive and discriminatory payment agreements.
In the "Financial Technology (FinTech) Development Plan (2019-2021)" released in September 2019, the central bank has clearly proposed to promote the interconnection of bar code payment, study and formulate technical standards for bar code payment interconnection, unify bar code payment coding rules, build a bar code payment interconnection technology system, break through bar code payment service barriers, and realize mutual recognition and mutual scanning of bar code logos of different Apps and merchants.
Many market analysts believe that the key to the full realization of interconnection in the payment industry is to see the mutual recognition between Alipay and WeChat Pay. It is only a matter of time before Alipay and WeChat Pay achieve interconnection, whether from the determination of regulators or the operation of commercial infrastructure, interconnection is an irreversible trend.
It is both an opportunity and a challenge
Will the pattern of the payment industry change after interconnection?
Wang Pengbo believes that the industry pattern will not change in the short term. At present, WeChat and Alipay occupy the "big head" in the market, and users have developed usage habits, coupled with other value-added services provided by each other, which makes the existing share of the two payment institutions will not change significantly after interconnection.
In the process of interconnection, payment institutions will inevitably face many new problems. For example, Wang Pengbo said that after the interconnection of WeChat and Alipay, it will obviously affect their respective traffic. In addition, the data attribution and profit sharing problems formed after interconnection also need to be clarified, the former determines the status of the industrial chain, and the latter determines the income ceiling of the platform in the era of increasingly meager payment profits, and these details need to be resolved through consultation between payment institutions.
But for consumers, payment interconnection is obviously a good thing. "Consumers will have more choices." Su Xiaorui said that today, Alipay, WeChat to cloud flash payment and other open payment scenarios, which means that users in the giant's own ecosystem will have more payment options based on their own preferences, which in turn forces all kinds of payment entities to do a good job in payment experience and deepen user refined operation.
"The huge changes in payments brought about by connectivity are both an opportunity and a challenge." Su Xiaorui said that for the payment giants who have previously relied on the dominant position in the industry to expand their business, whether the "moat" accumulated over the years can continue to attract and retain customers is also full of uncertainty in the future, and for all payment institutions, they need to rethink how to rely on advanced technology and high-quality services to base themselves on the market in the context of full market competition.
"Users will 'vote with their feet.'" Wang Pengbo believes that in the long run, payments are still subject to the control of the scene. The traffic with payment as the entrance will slowly divert, and whoever has a deeper degree of control over the relevant scenes, or has more say in the entire industry chain, consumers will choose who.
Source: Economic Daily