China’s Payment Industry will Re shuffle Soon

At present， with ex- periencing the rapid development accompanied by strong regulatory policy has been imposed on， Chinas third-party payment industry is gradually entering the stock shuffle period. Analysys Think Tank data show that the two third-party payment giants Ali Pay and WeChat pay alone occupy more than 90 percent of the market share， which means that the market share left for the remaining more than 200 thirdparty payment companys is less than 10 percent. At the same time， with the new policy that centralized management of provisions， the era when the third party payment agencies earn money as easy as lying ground is coming to an end and many institutions will shrink sharply.

Institutions merger and reorganization will increase

Analysys Think Tank latest statistics show that in 2016 the size of mobile payment market reached to 35.3 trillion yuan， with an increase of 115.9%. The first quarter of this year， mobile pay- ment transactions has reached to 18.8 trillion yuan， an increase of 214.9%. There are views that the size of this years mobile payment is expected to break through 64.9 trillion yuan. Under the high-speed development of the industry， third-party payment agencies which possess a large number of licenses but the business scale is small so it is difficult to achieve sustainable development with weak internal control are ussually exposed illegal operations.

For the payment industrys current development trend， CEO of Epro Pay Tang Bin compared it to a puppy child.“His height， weight has been almost the same as adults， but his development did not keep up with the idea， so this time， from the parents point of view， the adolescent children must be overlooked by the parents but at the same time must give them some freedom. Tang Bin said that the market has been large enough， regulators strengthening supervision is an inevitable trend. At the same time， the industry is also differentiated， the new business model is breeding.

The chairman and president of ChinaPnR Zhou Ye also put forward the views of regulators like “father”. “In the the initial stage of development of a new thing， the people who enter the market must be a group enthusiasts and a group of speculators， the regulators need to recognize that who is the real‘Bad boy and treat them differently. “In Zhou Yes view， the essence of the new finance is still finance， strict supervision is the inevitable trend， which will become a new opportunity for compliance enterprises. Since August 2015， a series of strong regulatory policies and regulations promulgated sent a clear signal that the Central Bank will control the total number of the third party payment agengcies and improve the quality of their service with focus on the supervision on them. On January 13 of this year， the Central Bank asked from April 17， 2017 onwards， the payment agency deposit provisionsto the designated institutions dedicated deposit account accordance with a certain percentage. And the implementation of the policy is to effectively deal with the risk of misappropriation of funds. In addition， the “network platform” on the line， also means that the third party payment agencies will return to the identity of payment service provider and no longer have the functions of liquidation.

Le Fu Pay said that what can be expected is that regulators will adjust at any time according to market developments to support market-approved payment agencies to become bigger and

stronger through mergers and acquisitions. Le Fu Pay said ：”In fact， now we can now see， do social， do business， do the phone， do logistics， and do some retail enterprises through the purchase of payment agencies to pay the license， has entered the payment industry， com- bined with their own business model and Application scenarios， so that payment to play a greater value space. “

Small and Medium-sized Payment Agencies Seek to Differentiate

At present， the third party payment agency products and services have been involved in transportation， medical and other more than 30 industries， the basicly realise full coverage of the peoples daily life.

Le Fu Pay said that the payment agencies are also transmitting from a simple payment tool provider into a service provider， from a simple fee collection to the scene application expansion. The actual products and services generated by the business， will bring long-term competitiveness for the thirdparty payment agencies and promote the growth of business scale and profit model upgrading.

“Payment industry has long been an industry with high threshold and a single channel payment model itself can not go far away.” Zhou Ye said that the payment of industry profits need to rely on economies of scale， economies of scale need to add integrated services. The payment company with annual processing volume of 100 billion or less is difficult to survive in the industry.

The above data show that Alipay and WeChat accounted for 53.7% and 39.51% respectively， making up for more than 90 percent of the market share. In addition， the new rules such as centralized management of provisions， make the majority of third-party payment agencies are subject to standardized restrictions. For the remaining more than 200 small and medium-sized third-party payment agencies， the survival pressure is self-evident.

The senior analyst of Analysys Financial Wang Pengbo pointed out that small and medium-sized payment agencies has basically lost competitiveness in the face of the giant. In the future， third-party payment industry will accelerate to develop in the direction of oligopoly the strong is always strong is the same truth in the market economy. In the view of a number of people in the industry， the current C2C has formed an oligopoly trend， B2B competition is also very intense， for most small and medium-sized payment agencies， the differentiation of development becomes inevitable. The future development of the industry， will show the following several mainstream trends.

Payment agencies will be strong and effective through merge and acquisition will be normal. Scenario payments will be a powerful way to drive the development of payment agencies while largescale low-frequency transactions will still be mainly POS-based payment， small high-frequency transactions will mainly use the mobile Internet payment. With the process of internationalization of the RMB and the increase of the frequency of RMB overseas use year by year， more and more Chinese domestic payment brand is to expand to overseas markets， cross-border payments will increase.

In addition， under the impetus of market competition， the competitions between non-bank payment agencies and commercial banks including customer channels， business services and other aspects of competition， have become benign competitive state with the advantage of the other side of the resources . Their respective differentiation advantages are constantly remodeling and deepen. The division of labor across the industry has become more professional， and will gradually build a larger the ecological circle of payment.

Zhou Ye said： “The importance of new technology is self-evident and is particularly evident for riskcontrol management. Big data， cloud computing and machine learning offers subversive effects and long-term effects for the industry development in the anti-fraud， credit assessment， investor behavior preferences. “

While Tang Bin is insisting on doing the payment industry in the depth of the industry. In his view， payment is not the purpose， but services for the transaction and life. Yi Bao does not have the scene advantages of Ali and Tencent， so it only does a field and does not need third-party endorsement， it has the trade chain of buying a ticket， mobile phone recharge， credit card repayment， so the core of the industry is to go far away. “This pattern of development over the past few years proved itself， but it develops slowly， mainly because the payment industry of the Chinese Internet mainly focued on individual consumers.” Tang Bin said that in the futur， Chinas reform of supply side is actually the enterprise side， the production mode upgrading needs a large number of services for enterprises.