Author: MiG, title figure from: Oriental IC
For the payment industry, 2019 is undoubtedly the most difficult year.
Preparation, cash credit channel, gray business… Under the tightening of supervision, the industry lost a series of profit tools, and profits plummeted to 10% in the past.
Practitioners leave and change careers; institutions reduce expenses, pay cuts, and layoffs. Live, it became the sole goal of most paying players.
From the very beginning everyone wants to squeeze in, and today’s survival is difficult, the payment industry seems to have finished a life cycle.
Pay this, P2P is like this, and cash lending is even more so. The financial industry seems to be unable to escape the curse of “getting a mess, killing one tube”…
Hibernation
At the high-level planning meeting in the second half of 2019, Ding Qi, the vice president of a payment company, wrote two words on the blackboard: “Alive.”
“Now the company’s profit is only 10%. We can only maintain our livelihoods. We must minimize energy consumption and survive the cold winter.” Ding has put together a series of business data and finally got a response. The strategy is to cut expenses, lay off employees, and develop new lines of business.
Before the end of the year, the company had to cut half of its employees, more than 500 people, and only retained less than 100 people.
The original three-story office only reserved one floor, and the remaining two floors were rented out or subletted. In order to reduce expenses, Ding Qi even asked to withdraw all the rented green plants.
“We can’t completely retire the business, because this license has value, we have to maintain a living state, and then go to the market to find a license buyer.” Ding Qi said.
He called this “hibernation.”
More and more payment companies have entered hibernation.
Zhang Tan has been working in the payment company for three years, but has never been so anxious as it is now.
He has just been transferred to work and is overwhelmed by new positions.
Since the beginning of the year, the company has made frequent internal adjustments. Many of his colleagues have been transferred and even reduced their salary by 50%.
The business changed in March and became the norm in the payment industry.
“The industry is too variable, the regulation is tightening step by step, and you have to adjust the direction at any time.” Zhang Tan said that the employees are more like the industry’s one-leaf boat, and they can’t find the focus and direction of the business.
In addition to internal adjustments, many payment companies are cutting back on expenses and cutting jobs in batches.
“In the past, our branch training sessions went to Sanya, and now they are all in the local conference room.” A payment company employee revealed.
A large number of practitioners choose to leave. “The industry has lost at least 30% of its employees.” Zhang Tan revealed.
In September, some media reported that the world has paid a notice of the settlement of the balance, which is to pave the way for the withdrawal of its payment business.
A person familiar with the matter said frankly, “The world has already sold some office equipment such as computers.”
“The whole industry has shrunk by more than 90%, and everyone is waiting to sell the licenses to realize it.” Ding Qi said.
The winter is over, only hibernate.
Step by step
The former payment industry is definitely the gold industry.
This industry has gone through the early spring and midsummer, and has had a fruitful harvest season.
In the late 1990s, the first third-party payment platform in China, “Shouyixin” was established, which opened the era of payment in China.
In the next few years, the payment services of the two giants came out one after another, and the industry ushered in the first outbreak.
Public information shows that in 2009, the third-party payment market reached 576.6 billion yuan, and more than 300 companies related to payment.
“A payment company, the annual profit was easily hundreds of millions.” Ding Qi remembered that there were many businesses that could make money at the time, and the methods and techniques were very strange, and many bank cakes were cut.
Until 2015, the payment industry welcomesIt is the highest peak in history.
This is because China’s financial technology has risen.
P2P, consumer finance, cash loans and other financial online businesses are inseparable from payment.
Some people say that China’s financial technology can set off a huge financial innovation storm, and it is inseparable from the mature and fertile soil of the payment industry.
In 2015, under the blessing of financial technology, the transaction volume of the third-party payment market has reached 31 trillion yuan.
In order to meet this trend, Ding Qi set up two business departments in the same year, “one is responsible for financial management, one is responsible for lending.”
The performance of these two departments is extremely outstanding, “a year of bringing a 50% profit to the company.”
At the annual meeting, both departments received the Outstanding Team Award. “Everyone’s bonus is tens of thousands of yuan.”
But the industry’s dividends and carnival did not last long. In 2017, regulation came and was called “the strictest regulation”.
The first knife that the regulator has cut into the payment industry is the “prepared payment”.
What is the reserve? It is refers to the settlement of funds generated by the payment account during the transaction due to the time difference.
For example, the payment institution has entered 100 million, but the customer does not need to turn away immediately. The 100 million yuan of funds can generate interest.
“For small payment companies, the income generated by the reserve fund accounts for at least 50%.” Ding Qi said.
The black-gray business was also cut off.
In March 2019, the “85th Document” was supervised to pay for black-and-grey business, such as gambling, money laundering, and so on.
“These profits account for more than 30% of the profits of the payment company.” Ding Qi said.
The first two core profit-making devices add up, and profits have accounted for 80% of the total profit of the payment industry. The last “cash cow” is cash loan.
In the era of hot cash lending, many payment institutions have earned a lot of money.
“When the previous volume was large, we could have tens of billions of water a year, and the profit was between one-tenth and one-thousandth of a thousand, that is, five to one billion yuan.” A cash payment agency The person in charge of the loan business revealed.
“The cash loan companies that come to us to pay for the channel are all growing up, and we have to pick up cooperation.” Ding Qi said.
After “3·15” this year, cash loans continued to be severely hit. Under pressure, payment institutions cut cash credits in the middle of the year.Road business, including industry-recognized “cash loan payment head players” Fuyou pay.
“Payment industry and financial technology have long formed a symbiotic relationship. After the financial technology is not working, the payment industry is difficult to maintain.” Ding Qi said that this is “the lips are cold.”
Tough breakout
Despite this, the payment industry has to live, and they are beginning to find a way out.
When making quick money is too easy, the bitter and tired B-side business has been ignored by the payment company.
The “Special Report on the Third-Party B-Payment Market” shows that there are more than 100 million merchants in various domestic markets, of which more than 70 million are individual merchants.
The B-side business market is huge, and there is still a certain amount of space.
At present, there are two main types of business models on the B side.
One type is To B, which is mainly based on the offline POS machine.
“Now, the cost of a POS machine is 80 yuan to 120 yuan.” Qin Ming, a practitioner of the payment institution.
Under the dealer-to-agent layer, “to the payment company, a machine has a profit of 5 yuan,” Qin Ming said.
“At present, the offline acquiring business is to maintain, we lose money to sell POS machines, relying on the flow of water profits.” Qin Ming said.
Because the profits are meager, the payment agency has to run some edge ball business.
The POS machines sold by most payment agencies are used by credit cards for users, and the ratio has even exceeded 80%.
But the cash outlay is also very small, between one ten thousandth and three ten thousandths.
“Cashing can guarantee that the payment institution will not starve to death. If it is not basic, it will always be a loss. More than half of the payment institutions are faced with such a situation.” Qin Ming said.
The other type is To Big B, which provides solutions for corporate payments.
For example, Baofu provides industry solutions for mutual funds and insurance.
“This amount is also very large. A large financial company can have hundreds of millions of water a day.”Zhang Rui, person in charge of the business, said.
This model is good, but it also faces industry thresholds and monopoly issues.
“All industries have their own industry barriers. They must understand the law of capital flow in this industry. If they enter, they will die.” Ding said that they have tried supply chain finance, stepped on countless pits, and finally The loss ended.
In the early days, many payment companies focused on the B-end and formed a monopoly in many industries.
For example, there is Epro payment in the aviation field.
In order to expand new merchants, the payment company “can only have one family”.
“Every cooperation is equivalent to a project. When a project is discussed, it sometimes takes half a year.” Zhang Rui said frankly, of course, it is possible that the bamboo basket will be filled with water.
Overall, the B-side business is bitter and tired, and it doesn’t make much money.
Therefore, many players have turned their eyes overseas and tried to make cross-border payments.
In 2013, the regulatory authorities formally approved third-party payment institutions to enter the cross-border payment market.
The senior executive of a payment institution, Luo Yan, revealed that his company had cross-border business since its inception.
The data released by the China Payment and Clearing Association shows that in 2018, the amount of cross-border Internet transactions of domestic third-party payment institutions exceeded 490 billion yuan. Some media predict that by 2020, the scale of the cross-border payment industry will exceed one trillion.
But at present, most organizations’ cross-border payment services are charged according to the bank’s handling fee. At the rate, one point is not earned.
So, what is the main reason for cross-border payments?
“Exchange rate.” Luo Yan said.
“The exchange rate between currencies is very large, especially for small currencies.” Luo Yan said. For example, the Indian Rupee.
If the cross-border business of a payment agency is 100 million yuan per day, and the floating space of the Indian rupee is 0.0001, the payment institution can earn 10,000.
The market for cross-border payments is just awakening, and it is still in the incubation period. Who can finally kill, the situation is still unclear.
“Either don’t make money, or it’s too hard to do.” Ding Qi said that there are not many outlets for the payment industry, and it is not tolerated.How many players.
Even during the hibernation period, there may be a tragic situation in which the road has frozen bones.
The financial industry always seems to be unable to make a strange circle: The time of development is surging, chaos is frequent, and it is forced to supervise the shot and return to zero overnight.
More than just paying for the industry, the entire financial technology industry has entered the winter.
But it is undeniable that the payment industry has played a driving role in China’s financial history: China has become the first country to enter a “cash-free society” and has set off a wave of innovation in financial technology.
Winter is here, but next spring may not be far away…
Author: MiG