As the application of various payment platforms matures, "going out without carrying cash" has become a common phenomenon in China's mainland despite only emerging a few years ago.
The so-called third-party payment refers to an independent organization with a particular strength and credibility guarantee, which facilitates the transactions between parties and fulfils the on-line payment by contracting with the major banks and interacts with their payment and settlement system.
Key players such as Alipay, WeChat Pay, PayPal and Apple Pay in this payment platform market have their own selling points, among which PayPal and Alipay boast the largest number of users. PayPal has prevailed in Europe and America while Alipay is the leading third-party payment platform in China; Lakala is China's largest off-line financial service provider; and other relatively smaller payment platforms such as Moneybookers, who specialise in the transfer of foreign exchange into domestic banks in e-banking, Geoswift, who is mainly involved in cross-border payment platform, ChinaPnR, who provides payment services including on-line payment, fund management, POS payment, mobile payment and tailored integrated payment solutions, and Allinpay, who is engaged in off-line payment.
The third-party payment platform service in China's mainland has basically met most of the market demand. But oddly, such convenient mode of payment has not yet developed outside China's mainland, especially the European and American countries who usually take the lead in technology.
Generally, the on-line and mobile payment technology should have its origin in Europe and America before thriving in China. However, as the third-party payment platform matures in the Chinese market, when will it enter the European and American markets? And will the same boom awaits as in the Chinese mainland market?
What cannot be ignored in considering this issue is the financial and banking backgrounds of China. China's on-line payment platform has two notable features:
Chinese users are more deposit card-based, which greatly expand the user groups, while European and American users are more credit card-based
The platform provides instant transfer and other handy features
From the first point, banks in China do not set any threshold for deposit cards and the cards are instantly available for free, which is impossible in most European and American banks who issue cards based on cost considerations. When issuing a card, the European and American banks have to take into consideration the comprehensive cost including manpower background system computing power, cash management, supporting network construction, launch, operation and maintenance of machine and equipment, resulting in much higher cost compared to China. Account opening requirements, charge and the waiting time are the barriers put up by European and American commercial banks for card applicants, which significantly limit the number of deposit card users, putting aside the security. This is one of the reasons why most people choose to use credit cards in Europe and America. This may have a great impact on the third-party payment in the European and American markets.
From the second point, third-party payment platform enjoys a leading position in terms of its absolute convenience. The transfer function is the key to the rapid development of various integrated financial services (Red Packet, payment collection and credit card repayment) by the domestic third-party payment platform. Interestingly, although the third-party payment platform made a big impact on the traditional banking industry, the easy payment flow actually depends on the deposit account opened by the customer in the banking system. On the contrary, European and American banks are not willing to provide the network security counter certification services for a large number of savings account with poor benefits or even negative benefits or settlement business for third-party platforms, leaving the already mature credit card payment system the only choice of on-line payment.
In general, the well-implemented banking system with sound security and relatively low cost, the policy orientation of the country and the pattern of consumption in China's mainland are the prerequisites for the extensive application of the third-party payment platform.