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The Era of Industrial Payment
2020 China’s Third-party Payment Industry Report
2©April 2020 iResearch Global Group www.iresearchchina.com
Definition and Differences Between Industrial Payment and
Personal PaymentIndustrial payment is a payment business model that payment institutions provide enterprises of different sizes and
industries with industrial solutions integrating payment, financial management, capital management, and marketing
services.
Industrial payment and personal payment are different in many aspects such as service targets, service content,
payment products, and key capabilities required for business development. The specific differences are shown in the
table below. The essential differences of the businesses result in different competitive landscapes in the industrial
payment and personal payment markets. While the personal payment market is oligarchic and reaching saturation, the
industrial payment market still has room for development.
Comparison of Industrial Payment and Personal Payment
Industrial Payment Personal Payment
Service targets ❑ Company ❑ Person
Service content
Provide companies of different sizes and in different industries with:
❑ Products and services such as payment and acquiring
❑ Industrial solution integrating payment, financial management, capital
management, marketing and other services
Provide personal users with:❑ Consumption payment services
❑ Derivative services such as lifestyle services
and financial services
Payment
products
❑ Online banking payment, payment gateway, fast payment, verified
payment, agreement payment, integrated payment, etc.
❑ POS、scanner, cash register and other acquire terminals❑ Personal APP
Key capabilities
❑ Business and channel capability
❑ Customization ability
❑ System and technology abilities
❑ Brand influence on specific area or industry
❑ Number and stickiness of users
❑ Breadth and depth covered by the scenario
❑ Diverse functions
❑ Subsidy capacity
❑ Extensive brand influence
Market
competition
❑ Incremental market still exists. The competition in stock market is fierce.
❑ Third-party payment institutions, banks and other players are competing
for market shares.
❑ The market is reaching saturation. Oligopolistic
competition is represented by Alipay and
Tenpay.
Source: iResearch Consulting Group.
3©April 2020 iResearch Global Group www.iresearchchina.com
Enter the Era of Industrial Payment
Industrial payment will be an important driver of the third-party mobile payment.
According to the main growth points, the development process of China's third-party mobile payment market can be
divided into three periods. The first period was from 2013 to 2017 and was driven by online scenarios. The successive
explosive growth of e-commerce, Internet finance, and transfer promoted the rapid growth of mobile payment. From
2017 to 2019 was the second period and it was driven by offline scenarios. The explosive growth of the offline QR code
payment started in 2017. The growth rate of payment in offline scenarios was much higher than that in online scenarios,
changing online-driven mobile payment to offline- driven. The third period started in 2019 and it is driven by industrial
payment. Online and offline payment driven by individual users started to grow steadily since the traffic was reaching the
peak. With the rapid rise of the industrial Internet, industrial payment has gradually become a new driver of mobile
payment in China.
Source: The data are based on interviews with experts and enterprises. The calculation is based on iResearch statistical model.
Transaction Scale of Third-party Mobile Payment in China From 2013 to 2020
Driven by e-
commerce
growth
Driven by growth
of internet
finance
Driven by growth of
transfer amount
Driven by offline QR code
paymentDriven by
industrial
payment
Driven by online
scenarios
Driven by offline
scenariosDriven by
industries
1.2 6.0 12.2
58.8
120.3
190.5 226.1
249.2
391.3%103.5%
381.9%104.7% 58.4% 18.7% 10.2%
2013 2014 2015 2016 2017 2018 2019 2020e
Transaction size (trillion yuan) % YoY growth rate
4©April 2020 iResearch Global Group www.iresearchchina.com
Payment Institutions Turn to Industries for Growth
Points
Alipay and Tenpay have absolute advantages. For other payment institutions,
turning to the industries for new incremental markets is the key to make
breakthroughs.
Alipay and Tenpay have now monopolized the third-party payment market. In 2019, the two giants accounted for 93.8%
of the mobile third-party payment market in China. In To C payment market, Alipay and Tenpay have absolute
advantages. For other payment institutions, turning to the industries for new incremental markets is the key to make
breakthroughs.
Alipay54.4%Tenpay
39.4%
1Qianbao1.5%
Jingdong Payment0.8%
UMFintech0.7%
99Bill0.6%
Yeepay0.5%
CHINAUMS0.4%
Suning Payment0.2%
Other1.5%
2019 Market Shares of Chinese Payment Institutions by the Scale of Third-party Mobile Payment Transactions
Source: The data are based on interviews with experts and enterprises. The calculation is based on iResearch statistical model.
5©April 2020 iResearch Global Group www.iresearchchina.com
Industrial Payment Ecology
Linkage and empowerment are the core functions of payment companies in the
industrial payment ecology.
Source: iResearch Consulting Group.
User(To C)
Payment Companies
Merchant(To C) Industrial service providers(To B)Product or service
Personal users’ payment
methods
Facial
recognition
QR code
payment
OtherNFC
payment
Payment
Industrial services
Logistics and Supply
Chain Services
Marketing and
Customer Acquisition
Services
Financial and Loan
Services
Finance and Tax Cost
Control services
Big Data Services AI Services
Digital Middle-
platform Services
… …
Operation management service
Operation data statistics | Supplier
management | Stock management | ……
Marketing management services
Member management | User profile | Users’
comment | ……
Intelligent tool
Facial recognition | Intelligent hardware |
Front-end order entry | ……
Financial services
Small and micro loans | Acquiring services |
Account balance wealth management | ……
Personal users’ payment data
Produce
1, Accumulation of payment data
3. Help to link
industrial service
providers with
merchants
2. Empower
industrial service
providers based on
"data + technology"
4, Provide merchants with a whole
set of digital upgrade solution
Merchant digital upgrade Product or service
Payment
… …
6©April 2020 iResearch Global Group www.iresearchchina.com
Scale of Third-party Payment Market
The third-party payment market with a scale of over 100 trillion yuan will be
reshuffled.
The exploration boom of e-commerce business began around 2000 in China. The start of the e-commerce business
leads to merchants’ online collection need, providing third-party payment institutions with enterprise service opportunities.
After that, promoted by the internet boom, internet transformation of aviation, tourism, education, insurance, retail,
finance, logistics, people’s livelihood, and many other industries started. The online development of logistics flow, capital
flow and information flow has promoted online development of various industries’ payment methods. The complexity of
industries results in urgent demand for customized industrial solutions, which provides huge room for the third-party
payment institutions to develop industrial payment and brings huge challenges to practitioners of industrial payment. The
transformation from single payment service to digital upgrade services covering the whole industry chain has become an
inevitable development trend. The third-party industrial market with a scale of over 100 trillion yuan will be reshuffled.
Source: The data are based on public information and interviews with enterprises. The calculation is based on iResearch statistical model.
0.93 1.893.97
6.128.58
10.58 11.9614.00
15.8517.72
103.2% 110.1%54.2% 40.2% 23.3% 13.1% 17.0% 13.2% 11.8%
2013 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e
2013-2022 Transaction Scale of Third-party Industrial Payment in China
Transaction scale of industrial payment (bn yuan) % YoY growth rate
7©April 2020 iResearch Global Group www.iresearchchina.com
Industrial Payment Path of the To C Payment Giants
Service upgrade and refinement for merchants using QR code payment
Relying on the traffic advantages of their Apps, the To C payment giants gradually cultivated the personal users' habit of
QR code payment through subsidies in the early stage. The popularity of QR code payment helped the giants to reach a
large number of merchants using QR code. Centered on these merchants, the industrial payment path of To C payment
giants take payment services as a starting point for service upgrade and refinement, creates open platforms to provide
merchants in different industries with customized "payment +" solutions, thus to realize the transformation from payment
service providers to digital upgrade service providers.
Source: iResearch Consulting Group.
MerchantUserPayment
Product or service
Cultivate the
personal users' habit
of QR code payment
To C payment
giants
Merchant payment service providers Merchant digital upgrade service providersTransform
Transformation and Upgrade of the To C Payment Giants in the Merchant Service Market
Based on payment services
Starting from the payment business,
providing digital upgrade services
covering the entire industry chain
centered on the needs of merchants
such as customer acquisition, logistics,
membership management, loans, and
insurance.
From providing standard
solutions for all kinds of
industries to providing
customized solutions targeting
the pain points of subdivided
industries.
Service
upgradeService
refinementConnect tens of
millions of
merchants via
QR codes
8©April 2020 iResearch Global Group www.iresearchchina.com
Industrial Payment Path of the To C Payment Giants
The To C payment giants will intensify competition in the merchant digital upgrade
service market
With traffic and ecological advantages, the To C payment giants will quickly increase their shares in the market of digital
upgrade service for merchants. However, the objective complexity of the To B service market makes it difficult for them to
monopolize as quickly as they did in the To C payment service market. Therefore, the competition in the merchant
service market will become fiercer. An industrial payment competition landscape with “two great players and many strong
players” formed by Alipay, Tenpay and other head payment companies, such as 1Qianbao, Bestpay, Suning Payment,
Suixingfu, 99bill, Baofu, Hebao Payment, and Lakala, will last for a long time.
Source: iResearch Consulting Group.
To C Payment Giants’ Impact on the Merchant Service Market
Alipay and WeChat Payment are supported by Alibaba
ecology and Tencent ecology, respectively. When
helping merchants with their digital upgrade, the main
functions of the payment companies are linkage and
empowerment. Ecological advantages mainly helps To C
payment giants to link the ecological scenarios and
empower the cutting-edge technologies.
Ecological Advantages
The To C payment giants linked tens of millions of
merchants through QR code payment, completing the
traffic accumulation of the merchants. The traffic
advantages of the merchants provide a good basis for
the To C payment giants to enter the market of
merchant digital upgrade service.
Traffic Advantages The huge merchant groups have
three features, which are wide
geographical distribution, large
industry span, and high difference in
pain points. The complexity of the
merchant service market makes it
difficult for the To C payment giants
to monopolize as quickly as they did
in the To C payment service market.
Thus, the competitive landscape of
the industrial payment market will
have “two great players and many
strong players” for a long time.
Complexity of the Market
Intensify
competition in
the merchants
digital
upgrade
service market
Objective complexity of the To
B service market
To C Payment Giants Enter the Market
Fin
al re
su
lt
9©April 2020 iResearch Global Group www.iresearchchina.com
The Main Industrial Payment Scenarios that To B
Players are Involved inThe integration progress of third-party payment and industries depends on the time
and difficulty of the Internet transformation of a certain industryCurrently, the main industries that To B third-party payment institutions are involved in include e-commerce, retail, cross-
border trade, logistics, tourism, aviation, education, internet finance, insurance, digital entertainment, and public utilities.
For the industries mentioned above, the coverage process of industrial payment mainly depends on the time and
difficulty of the Internet transformation of a certain industry. For example, the industrial scenarios that are reached by
third-party payment in the early stage include the e-commerce industry with Internet genes and the aviation and tourism
industries that embraced the Internet in the early period. In recent years, industrial payment in cross-border, logistics and
retail scenarios has been booming. The third-party payment's value and impact on these industries will be discussed in
detail later.
Diverse payment productsE-commerce Retail
Cross-border
tradeLogistics
Tourism Aviation EducationInternet
finance
InsuranceDigital
entertainmentPublic
utilities
Government
payment
Th
e T
o B
Th
ird-p
arty
Pa
ym
en
t
Ins
titutio
ns
Customized solutions
Mature risk control system
Fund guarantee
Professional and efficient services…
Source: iResearch Consulting Group.
The Main Industrial Payment Scenarios that To B Players Are Involved in
10©April 2020 iResearch Global Group www.iresearchchina.com ©April 2020 iResearch Global Group www.iresearchchina.com
0.71.1
1.72.3
3.13.8
4.45.0
5.6
57.1% 54.5% 35.3% 34.8% 22.6% 15.8% 13.6% 12.0%
2013 2014 2015 2016 2017 2018 2019e 2020e 2021e
2013-2021 Size of China’s Cross-border Export Retail E-commerce Industry
Industry size (trillion yuan) % Growth rate
Scenario One: Cross-border Retail E-commerce
Payment
The payment scale grows with the development of cross-border retail e-
commerce, and its growth rate tend so be stable.
In the past few years, promoted by the “Belt and Road Initiative”, RMB internationalization and consumption upgrading, the
healthy and rapid development of cross-border e-commerce have received strong policy support. The continuously
growing market scale of cross-border import and export retail e-commerce provides a huge market potential for cross-
border payment business, and further drives the demand for cross-border payment in upstream and downstream
industries (such as warehousing and logistics). The demand side is booming but the supply side is facing fierce
competition. With the advantages of convenient cross-border collection and payment procedures, high speed, and flexible
response to the diverse dynamic needs of sellers and platforms, the third-party payment institutions have surpassed banks
and remittance companies and become the major player in the field of cross-border retail e-commerce payment.
Source: The data are based on public information and interviews with enterprises. The
research and charts are done by iResearch independently.
Source: The data are based on public information and interviews with enterprises. The
research and charts are done by iResearch independently.
5.98 14.6641.16
74.42111.34
161.33
218.27
282.44
355.59
145.3%180.8%80.8% 49.6% 44.9% 35.3% 29.4% 25.9%
2013 2014 2015 2016 2017 2018 2019e 2020e 2021e
2013-2021 Size of China’s Cross-border Import Retail E-commerce Industry
Industry size (billion yuan) % Growth rate
11©April 2020 iResearch Global Group www.iresearchchina.com
Scenario Two:Logistics Payment
The online development of information flow result in a logistics payment market
with a scale of over 100 billion yuan.
1.6168.81
217.29
375.08
477.72
581.57
4181.9%
215.8% 72.6% 27.4% 21.7%
2016 2017 2018 2019e 2020e 2021e
2016-2021 The Transaction Scale of To B Third-party Payment Institutions’ Logistics Payment
Transaction scale (billion yuan) % Growth rate
The operation method of the logistics industry is relatively traditional. Payment and settlement are mostly in cash in the
early period. With the integration by fourth-party logistics, the information flow is gradually developing online, resulting in
the development of online payment methods. Therefore, the combination of the logistics industry and third-party payment
is later than other industrial payment scenarios such as e-commerce. Before 2017, only a few head acquirers were
involved in logistics payment. In 2017, many third-party payment institutions entered the track of logistics payment.
Companies in the logistics industry get involved in logistics payment through acquiring payment licenses. The transaction
scale of logistics payment surged. In 2018, the transaction size of To B third-party payment institutions’ logistics payment
reached 217.29 billion yuan.
Note: Excluding the express services handled by large e-commerce platforms such as Taobao and JD, and the scale of personal transactions processed by third-party payment institutions;
Source: The data are from interviews with enterprises and experts. The calculation is based on iResearch statistical model. The research and chart are done by iResearch independently.
12©April 2020 iResearch Global Group www.iresearchchina.com
Scenario Three: Retail Payment
Retail payment is leading the de-media payment
With the promotion of facial recognition devices such as Dragonfly Payment, Frog Payment, and Lanjing Payment, face
scan payment began in 2019. As an upgrade of payment experience after QR code payment, the new intelligent
hardware used for face scan payment gradually appear on the cashier desk in various offline retail stores, changing the
operation and consumption forms of the retail industry. The popularity of face scan payment started “experience
economy” of the retail industry. The intelligent hardware that integrates payment, membership management, advertising,
marketing and SaaS services connects the retail stores with the strong ecology behind payment institutions, bringing
more imagine space for the intelligent operation of retail merchants through scenario transformation and service
innovation.
Payment Evolution and Assumptions
Integrated QR
code payment
Integrated face
scan payment
Integration of QR
code and face
scan payment
Source: iResearch Consulting Group.
13©April 2020 iResearch Global Group www.iresearchchina.com
1. Intelligent payment
2. Online financing
3. Digital marketing
4. Digital management
The Pandemic Will Accelerate the Process of
Industrial PaymentThe offline customer acquisition channels are blocked by the COVID-19 pandemic.
Merchant digital upgrade is based on industrial payment service providers.
Because of the pandemic, the consumers need to stay at home for a long time. They make consumption through online
channels. Many merchants’ offline customer acquisition channels are blocked. Only a small number of merchants have
finished online + offline layout. Therefore, during the pandemic, a large number of merchants carry out digital upgrading
based on industrial payment service providers and demand for building online stores. iResearch believes that the
pandemic objectively accelerates merchant digital upgrade process. Industrial payment service providers with “payment+”
layout will have an opportunity for fast development.
Source: iResearch Consulting Group.
Consumer Offline customer acquisition
Online customer acquisition
Stay at home Build cloud store
Online consumption
Logistics and delivery
Digitalization
Blo
ck
AccelerateStay at home
during the
pandemic
Merchant
Lead to
The Pandemic Will Accelerate the Process of Industrial Payment
Pandemic
14
Definition and Differences Between Industrial Payment and Personal Payment
Abstract
1 Development Background of China's Third-party Industrial Payment Market
1.1 Enter the Era of Industrial Payment
1.2 Third-party Payment is a Barometer of Internet Transformation
1.3 To C Traffic Has Peaked and Industrial Internet Concept is Proposed
1.4 Payment Institutions Turn to the Industries for Growth Points
1.5 Industrial Payment Ecology
1.6 Types of Players Involved in Third-party Payment
2 Status Quo of China's Third-party Industrial Payment Market
2.1 Third-party Industrial Payment Market Size
2.2 Development of Industrial Payment of To C Players
2.2.1 Development of Industrial Payment of To C Payment Giant
2.3 Development of Industrial Payment of To B Players
2.3.1 Industrial Payment Scenarios that To B Players Mainly Involved in
2.3.2 Scenario One: Cross-border Retail E-commerce Payment
2.3.3 Scenario Two: Logistics Payment
2.3.4 Scenario Three: Retail Payment
Table of Contents of the Full Report
15
3 Case Study of Third-party Payment Market in China
3.1 Alipay
3.2 1Qianbao
3.3 99Bill
3.4 Baofu
3.5 Suixingfu
3.6 BESTPAY
3.7 Suning Payment
3.8 Hebao Payment
3.9 Lakala
4 Development Trends of China’s Third-party Payment Market
4.1 The Pandemic Will Accelerate the Process of Industrial Payment
4.2 Science and Technology Promote Payment
4.3 Trend of Investment in Technology
Table of Contents of the Full Report
16
Company Introduction / Legal Notice
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preferred third-party research brand for the IPO of Chinese internet companies. iResearch set up its global research center in 2015,
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