Big guns take aim at payment market

 

In 2020, Chinese giants have ramped up the pace of taking licenses and entering the payment field, including ByteDance, Ctrip, Kuaishou, Pinduoduo and so on.
 
And in 2021, such moves still continue. The parent company of Bilibili, Shanghai Hode Information Technology Co., has registered the domain names "bilibilipay.com" and "bilibilipay.cn" and was given approval for an Internet Content Provider (ICP) license, according to a Chinese media outlet. In addition, the Nasdaq-listed firm has also been recruiting payment business-related positions on its website since November last year. 

At present, the layout of Bilibili is still in the early stage in the payment field. If it successfully "gets a license", it means that the Internet giants are almost fully present in the payment field, and the pattern of the payment industry will be further strengthened. 
 

Payment business is hot, the Internet giants are all-in
 
Nowadays, Alipay and Tenpay (including WeChat Pay) still occupy the majority of the market share.
 
Data show that as of the fourth quarter of 2019, Alipay has a 55.1% market share in mobile payments; Tenpay, in second place, currently stands at 38.9%. Although Alipay and WeChat Pay frequently choke each other, it is undeniable that the two occupy a pivotal position in China's mobile payment market.
 
The later is coveting the payment license for a long time, trying to get the "license" through direct or indirect means.
 
For example, after obtaining two financial licenses, ByteDance obtained a payment license at the end of August last year, which intended to accelerate the occupation of market share. And the social e-commerce platform Pinduoduo formally acquired Fufeitong early last year.
 
Obtaining third-party payment business licenses through acquisition has become common practice among Chinese internet giants since the central bank stopped issuing new ones indefinitely in 2016. Internet companies such as Vipshop, Meituan, Ctrip and Kuaishou have all obtained third-party payment licenses by way of acquisitions.  
And also as an emerging Internet enterprise, the intention of Bilibili to obtain a payment license and the launch of payment tools has been demonstrated.
 
On a current job posting for a senior payment platform development engineer published, candidates will be "responsible for the core technology research and development of the Bilibili payment platform."
 
Whether for the layout of the enterprise, or the fast-growing Bilibili, payment business is still a growth-valued market. It is foreseeable that the giants will compete in a single payment business, which may trigger a comprehensive financial war. However, why does Bilibili choose this time to get involved in the payment field?


The pros and cons that Bilibili enters into the payment market
 
The payment business has become the standard of the Internet giants, while Bilibili has not built an independent payment channel, which may be one of the reasons why it tries to develop its own payment business.
 
It can be found that WeChat Pay and Alipay are its main existing payment channels. If it continues to maintain the status quo, it is not good news for Bilibili in the long run. There is a certain risk of relying too much on third-party payment channels, which will have an impact on its original business if lost.
 
The Internet giants that previously mentioned getting a license have already started preparing their own payment tools, which gives Bilibili a sense of urgency.
 
Some giants like Bilibili, ByteDance, Meituan, Pinduoduo and Didi are the latest companies to vie for a share of China's payments sector, which is currently dominated by Ant Group's Alipay and Tencent's WeChat Pay.
 
Therefore, Bilibili chose to enter the game at this time, not only to face Alipay and WeChat Pay, but also a host of e-commerce platforms. The reason behind being able to muster the courage to enter the payment field may be more than just getting rid of dependence on WeChat and Alipay.
 
Having an independent payment business not only avoids paying channel fees to three parties, but also enables them to keep confidential data such as order information, transaction totals, and user payment information completely under their control.
 
Importantly, "Generation Z" and "strong community atmosphere" have always been the key words of Bilibili, and users in this age group have strong online spending power. If users need financial related services, they can choose products from their own platform. Naturally, this part of users has the potential value space that can be tapped by Bilibili.

Specifically in terms of business, the businesses of Bilibili include live value-added services, games, e-commerce, advertising, which has formed a relatively stable transaction and cooperation ecology. These businesses can be paid for its own payment channel, which can save costs and find commercialization possibilities.
 
The entrance of payment gives Bilibili a possibility to expand more online financial scenarios. This is also an important reason for other giants to enter the payment market. In the future, if Bilibili gets a payment license, it can be used as a door knocker to enter the financial field.


Can the payment pattern dominated by Alibaba and Tencent be changed in 2021?
 
Currently, Asian markets are recovering faster than European and American markets. It means that more overseas funds may leave developed countries and flock to Asian markets this year, and a large number of overseas mature investment institutions will enter China to find quality investment projects.
 
And the Internet giants need to develop new expansion projects related to their original business. The payment business may become the point that investment institutions are happy to see, and those Chinese head companies that develop payment business are expected to benefit.
 
The first signs of this phenomenon were seen last year. American Express targeted the Chinese payment market and officially entered China last year.
 
At present, it has already cooperated with three major mobile wallet operators, namely Alipay, WeChat Pay and UnionPay. After binding the mobile wallet, you can still make payments on various merchants that support mobile payment nationwide, just like binding a UnionPay card. Apple, too, will probably make a move this year.
 
The market is expected to be further opened up. According to data from the China Clearing and Payments Association, as of March 2020, the size of China's network payment users was 768 million, up 28% year-on-year, accounting for 85% of the overall number of Internet users; the scale of network payment transactions reached 25.12 billion in 2019, with mobile payments reaching 22.62 billion.
  
In 2018, China's mobile payment transactions exceeded RMB 190 trillion (about USD 27 trillion), making it the world's largest mobile payment market.
  
Whether it is ByteDance, Ctrip, Kuaishou, Bilibili or Didi, they are around the users on these platforms to provide them with payment services, to some extent at least to avoid these users jump to Alipay or WeChat for payment. At this level, it will be challenging for Alibaba and Tencent to continue to expand more market share in the payments market.
 
At present, it is difficult to shake the position of Alibaba and Tencent in the field of payment by the new Internet giants, but it is likely to form a variety of forces to grab the payment market pattern. In 2021, the payment market is still likely to set off the battle of multiple forces to grab market share.

This is an article from WeChat official accounts MeiGuyanjiushe (ID: meigushe), translated by Chris Yuan.