Digital RMB makes consumers feel novel, but it makes the third-party payment industry feel uneasy. It is still unclear how much the digital renminbi will affect third-party payments. They have no choice but to do a good job of their existing businesses, they can only take a step forward. This article is from the WeChat official account:All Weather Technology (ID: iawtmt) author: Zhang Jilong, editor: Luo Lijuan, the original title: “digital RMB drive to: micro letter, Alipay are Waiting for Godot”, the first map from: vision China
In Shenzhen, 50,000 people are adopting digital renminbi.
On October 9, the Shenzhen Municipal Government and the People’s Bank of the People’s Bank of China launched a pilot digital renminbi red envelope and launched the “2020 Reward Luohu” series of consumer promotion activities, and distributed 10 million yuan of “Reward Luohu Digital RMB Red Packet” through lottery.
Many local users in Shenzhen tried to make an appointment.
They face fierce competition. The Shenzhen Municipal Service Data Administration stated that the number of people who registered for this event was about 1.914 million, and 50,000 were won. The winning rate is about 2.6%.
Luo Liang, a CCB user, never thought that he would become one of the “koi”. This also made him a “red man” in the company-in order to watch how to use digital renminbi for shopping, several of his colleagues “competed” to drive Luo Liang to the mall and “by the way” experience the digital renminbi consumption process.
Luo Liang chose Luohu Mixc as his shopping location. He found that many merchants here have set up “digital renminbi” signs at the cash register, expressing support for digital renminbi red envelope consumption.
In the final payment link, using digital renminbi is similar to using WeChat and Alipay. Users can either scan the merchant’s payment code to pay, or the merchant can scan the user’s payment code to receive payment.
Digital RMB interface diagram, the picture comes from the Internet
However, Luo Liang noticed that the merchant’s barcode scanning machine is not a common “little white box” that supports WeChat and Alipay, but a special machine.
So, for consumers, what is the difference between using digital RMB to pay and WeChat and Alipay?
In September and October this year, Fan Yifei and Chen Yulu, deputy governors of the central bank, respectively wrote articles explaining many hot issues of digital renminbi.
Fan Yifei said that from the perspective of M0’s fee system, the digital renminbi is a public product provided by the central bank to the public. No interest is calculated and the central bank does not charge for services such as exchange and circulation.
On October 11, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued relevant plans to support the development of internal closed pilot testing of digital renminbi, and promote the development and application of digital renminbi and international cooperation.
For this topic of high social concern, unlike consumers, the mood of the third-party payment industry is more “complex”.
“Digital renminbi is bad for all third-party payment institutions.” Liu Jianlong, a top-ranked third-party payment company executive in China, said that for digital renminbi, the industry “everyone is more worried.”
A giant like Alipay is no exception. Ant Group previously mentioned in the prospectus that “digital RMB is a digital form of RMB, positioned as a currency in circulation (M0), Different from ordinary electronic payment tools. It is difficult to evaluate the impact of this work on the company’s business, financial status and operating results.”
1. New species is here
Although in the eyes of consumers, digital RMB and third-party payment workers such as WeChat and AlipayThere is not much difference in body perception, but in the eyes of industry professionals, these are two completely different species.
Zhao Guangbin, a senior economist at PricewaterhouseCoopers in China, wrote an article that In essence, digital renminbi is “money or currency”, and mobile payment is “a way to receive and collect money.” The relationship between the two can be likened to “fish” and “hook”, or “water” and “dipper”, with completely different properties.
Even if the digital renminbi is compared with funds in third-party payment tools such as WeChat and Alipay, the attributes of the two parties are quite different.
“The simplest way to understand the central bank’s digital currency is electronic cash, which changes the carrier of legal tender from paper to electronic, which is the digital form of paper money.” Li Lianxuan, a researcher at Ouke Cloud Chain Group, believes that the two are the biggest The difference is: From the perspective of currency statistics, the central bank’s digital currency belongs to the category of M0, that is, cash; the funds in the third-party payment tool are essentially deposits from non-deposit financial institutions and belong to the category of M2.
In other words, digital RMB account is a native bank account, and the amount in it is equivalent to the existing “a piece of money”;and the user opens in a third-party payment tool The account of is just a bookkeeping account, the corresponding amount is a deposit in a commercial bank, so when a user uses a third-party payment, he must associate the funds in the bank card account.
In contrast, digital renminbi is more efficient in payment and can realize payment and settlement. Third-party payment institutions must clear through the clearing institution.
Third-party payment tools such as WeChat and Alipay charge a certain fee when used, while digital renminbi, as a public product, does not require a fee when used.
Fan Yifei pointed out that, in fact, the deposit currency of commercial banks cannot replace legal tender to perform the function of a value scale or unit of account. Moreover, electronic payment tools based on commercial bank deposit currencies, based on the tightly coupled account model, still have much room for improvement in application scenario coverage, inclusive finance, payment efficiency, user privacy protection, and anonymous payment.
Non-cash payment tools, such as traditional bank cards and Internet payments, are based on tightly coupled accounts and cannot be anonymous. The digital renminbi supports loose coupling of bank accounts, which can achieve “controllable anonymity.”
According to industry insiders, “controllable anonymity” means “you and your counterparty seem to be anonymous to each other, but they are not anonymous to the central bank at all.” The advantage of controllable anonymity is that it can balance and protect both users. Data privacy and prevention of illegal and criminal acts such as money laundering, terrorist financing and tax evasion have effectively maintained financial stability.
As crypto assets such as Bitcoin and global stablecoins have tried to perform currency functions in recent years, a new round of private currency, foreign currency and legal tender has begun. “In response to this situation, it is necessary for the country to use new technologies to digitize M0 and provide a universal base currency for the development of the digital economy.” Fan Yifei mentioned.
As a legal tender issued by the central bank, digital renminbi is not allowed to be rejected, it will have the most extensive use scenarios, and its legal status and security are higher than third-party payment tools.
“If a third-party payment company goes bankrupt one day, people’s funds in it will also be at risk, but the central bank digital currency does not have these problems.” Li Lianxuan, a researcher at Ouke Cloud Chain Group, said.
In addition, digital RMB can also realize dual offline payment.
Regarding the application scenario of dual offline payment, Mu Changchun, the director of the Central Bank Digital Currency Research Institute, once cited such an example: Two people have DCEP in their mobile phones (Digital Currency Electronic Payment, digital currency) digital wallet, as long as the mobile phone has electricity, even if there is no internet, the touch of two mobile phones can transfer the digital currency in one person’s electronic wallet to another.
Currently, third-party payment software has not implemented this function. According to a person in the payment industry, there are two types of offline payment. One is offline. Alipay and WeChat payment can be realized. Usually, when you buy something, the seller posts the payment QR code. As long as the buyer is online, the payment can be made. The other is dual offline, that is, both parties complete payment and collection without internet.
The current problem with the dual offline mode is the “double spend problem”, which means that a sum of money is reused when offline.
How to solve this problem is of great concern to the outside world.
“The current technology patents have not yet explained how to solve the’double spending problem’ in the dual offline situation, so we need to wait for more technology patents to be disclosed in the future.” Li Lianxuan believes.
However, the “double-spending problem” is not only technology that can solve it. At present, the central bank has stipulated that DCEP can only be used in small retail scenarios, which to a certain extent avoids the huge losses caused by the “double spending problem”. On the other hand, the premise of the traditional “double-spending problem” is that the user has the motivation and ability to do evil, but in reality, the legal system and regulatory measures can be used to ensure that the user does not dare to do evil, or it can be paid after the “double-spending” occurs. .
Second, the biggest disadvantage of third-party payment
What is the biggest disadvantage of digital RMB for third-party payment?
In the eyes of Liu Jianlong, an executive of the aforementioned third-party payment agency, the answer is “account value.”
With the emergence of digital RMB accounts, the central bank may take the lead in personal funds accounts, thereby weakening the value of third-party payment wallet accounts. Commercial banks, Alipay and WeChat will all become service providers.
In Shenzhen’s digital renminbi pilot, some users found that the agreement pointed out that WeChat Pay and Alipay are both service organizations.
In this regard, the research report of Southwest Securities mentioned that after DCEP officially landed, part of third-party electronic payment services such as Alipay and WeChat may also be integrated by DCEP, and “to be sure, < span class="text-remarks" label="Remarks">(DCEP) will divert users from third-party payment institutions once it landed, and financial services monetized by traffic will be significantly negatively affected.” strong>
After being integrated, the business space of third-party payment institutions may be limited. For example, “There is no way to do some special development on the account.” Liu Jianlong believes that even if it is done through an external supplier, it needs the account support of the digital renminbi to obtain the permission of the policy.
Therefore, after the launch of the digital RMB, will it change the mobile payment market? Among them, the impact on the two major payment giants Alipay and WeChat has attracted the most attention from outsiders.
For many years, Alipay and WeChat have dominated the mobile payment market. According to the report released by iResearch, in the second quarter of 2020, Alipay’s market share was 55.6%, and Tenpay (including WeChat Pay) accounted for 38.8 %, total accounted forAccording to the market share of more than 94%.
2020Q domestic third-party mobile payment market structure, the picture comes from iResearch Consulting
Therefore, voices of excessively high concentration in the mobile payment market also appear from time to time.
In 2017, Liao Rui, vice president of Epay’s strategy, said in an exclusive interview with the “Xinhua Interview” column, “Generally speaking, the top 10 competitors in an industry have a market share of more than 60%, which is a highly concentrated However, the third-party payment industry far exceeds this share.” He believes that Because of the high degree of concentration, regulators will foresee risks and must take more powerful measures to balance market competition.
In fact, in the past few years, regulators have indeed taken some actions. For example, at the “China Payment and Settlement Forum” held in 2017, Fan Yifei publicly mentioned the concept of “full openness” for the first time.
He said that to promote the opening of the electronic payment field, welcome and encourage foreign investment in the development and competition of my country’s electronic payment business, and promote the further optimization of my country’s payment service market structure. “Increasing market entities will help diversify risks, maintain financial stability, and ease the risk of excessive market concentration.”
In the article “Analysis on the Policy Implications of the Positioning of Digital RMB M0”, Fan Yifei also mentioned that one of the values of the digital RMB is “to help break retail payment barriers and market segmentation, avoid market distortions, and protect the rights and interests of financial consumers. To promote inclusive finance.”
The report issued by the Bank for International Settlements stated that, in addition to providing cash supplements to facilitate online transactions, the digital currency of the People’s Bank of China may also bring diverse choices in the field of mobile payments.
Actually, for digital RMB, how to increase the penetration rate in the next step is a key issue.
At present, digital renminbi is also the main retail payment, starting from the field of life services.
Dong Ximiao, chief researcher of China Merchants Union Finance, wrote an article that digital RMB is mainly positioned in smallAmount, retail payment. Businesses that can use digital renminbi, including shopping malls and supermarkets, living services, daily retail, and catering consumption, are closely related to the daily consumption of ordinary people. This is consistent with the common usage scenarios of WeChat and Alipay.
Fan Yifei disclosed the internal testing of digital renminbi at the 2020 SIBOS annual meeting: As of the end of August 2020, there have been more than 6,700 pilot scenarios nationwide, covering life payment, catering services, transportation, shopping and consumption, government services, etc. Field: A total of 113,300 personal wallets and 8,859 public wallets have been opened, with more than 3.12 million transactions and a transaction amount exceeding 1.1 billion yuan.
3. Countermeasures for WeChat and Alipay
Faced with the potential impact of digital RMB, what should third-party payment institutions do?
A person in the third-party payment industry believes that the user stickiness that WeChat and Alipay expected in the past is to “stick” to the account. “Now if this account is an account of the People’s Bank of China, the willingness may not be so strong. After all, I do not have strong control over this account.”
In this situation, payment accounts may become a pure tool. Alipay and WeChat Pay need to rely on services and ecology to control users. The service also happens to be the strongest moat for WeChat and Alipay.
On March 10, Alipay announced its official transition to digital life services. The picture is from Ant Financial
WeChat Pay and Alipay, which have many businesses and strong capabilities, may be able to turn around calmly, but what about small and medium-sized third-party payment institutions?
“It’s useless to worry,” said Liu Jianlong, a senior executive of the aforementioned third-party payment institution. Many third-party payment institutions are taking a step-by-step approach. “We didn’t organize a team like a consulting company. Specializing in the study of digital renminbi, the dominant power of digital currency lies with the central bank.” And small and medium-sized third-party payment institutions onlyCan choose to “fit as much as possible”.
But what made him feel a little “balanced” is, “Everyone, like everyone, is competing under tightening conditions.”
“Survival first, good service to existing customers” has become the consensus of the third-party payment industry.
For Liu Jianlong, a gratifying situation is that his institution is also engaged in the aggregation payment business. The digital renminbi may have less impact on aggregate payment service providers.
“Digital wallets do not change the acquiring business model. Someone must go to serve the merchants and receive the money from qualified acquirers before giving them to the merchants.” Liu Jianlong believes that it is impossible for the central bank and commercial banks to operate at the front desk. Therefore, service providers are still required to provide services, provide acquiring services for merchants, and control merchants’ compliance access. “This process will not disappear.”
(Luo Liang and Liu Jianlong are pseudonyms) This article is from WeChat official account:All Weather Technology (ID : iawtmt) , author: Zhang Jilong, editor: Luo Lijuan