Who Will Win in The Future E-Payment Market?

Source:iResearch August 20,201510:52 PM

The payment and clearing system comprised of UnionPay and the payment system of central bank serves as the core part of China e-payment system. With a large number and high GMV, commercial banks, online and offline third-party payment companies and telecom operators are the important players. Providers of payment software and hardware and acquiring agents are the supporting parties. The whole system is supervised and regulated by institutions including The People's Bank of China and serves Chinese users and merchants.

The core players include bankcard organizations such as China UnionPay, commercial banks including four major  state-owned banks, joint-stock banks and city commercial banks, third-party offline acquiring service providers such as Chinaums, Sand and ChinaPnR, third-party online and mobile payment companies represented by Alipay and Tenpay, prepaid card issuers such as Property & Credit and Beijing Municipal Administration & Communication Card, telecom operators such as China Mobile, China Unicom and China Telecom, as well as e-payment software, hardware and device providers including Apple, Samsung, Huawei and the like.

Bankcard Organization: sharing of acquiring service and inter-bank transaction commission; ATM inter-bank withdrawal commission; non-financial institution payment clearing and brand service amid bank card issuing (similar to title sponsorship), etc.
Commercial Bank: sharing of the commission of card issuing bank charged from bank card transaction; sharing of the commission of acquiring bank charged from bank card transaction; commission of account transfer via e-bank, etc.; sharing of the commission of express payment, etc.
Third-payment Company: e-commerce platforms’ payment for solution; transaction commission paid by e-commerce merchants; interest of sedimentary money, etc.

GMV of commercial banks’ e-payment is higher but the growth is lower compared with third-party payment

Categorizing main payment types of China electronic industry by their GMV and YoY growth, we can make the following conclusions: 1. Payment via mobile device generally exceeds that via PC by the growth. 2. By the GMV of e-payment, commercial banks outdistances third-party payment companies. 3. On the same device, third-party payment companies outstrips banks in e-payment growth.

iResearch holds the opinion that liability business and asset business are the core services of banks, while payment, clearing and e-bank service just account  for a small part in banks’ intermediate business and the revenue from them takes only a small share in the total revenues of banks. However, payment and clearing service, a tool for cash transfer and payment, is the main service of third-party payment comapnies and still belongs to the intermediate business of bank.

For banks, e-bank and other business are designed to offer better service for existing customers of more important liability business and asset business. Nevertheless, for third-party payment companies, payment products are used to directly attract as well as retain customers, as e-payment is the basement of third party payment. Thus, compared with commercial banks, development of new products and improvement of payment process is much more important for third-party payment companies. Furthermore, payment data are attached with more importance and used more frequently by third-party payment companies than by banks. 

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