New pattern after payment interconnection

News from the mobile payment network: After a long period of silence, the interconnection of payment made waves again, and Cloud QuickPass opened up WeChat Pay and Alipay. Behind the new progress, new thinking has been brought to the industry.

The new situation of payment interconnection

According to the official announcements of Alipay and WeChat Pay, both parties are emphasizing mutual recognition when scanning codes online.

Alipay announcement: At present, 85% of Taobao shops have supported consumers to pay through cloud flash payment. In addition, in Beijing, Tianjin, Guangzhou, Shenzhen, Chengdu, Chongqing, Xi’an and other cities across the country, the mutual recognition of collection code scanning has been achieved, and it is planned to cover all cities across the country in March next year. 

WeChat Announcement: WeChat Pay and UnionPay Cloud QuickPass App have officially realized mutual recognition and mutual scanning of offline barcodes. Users can scan the WeChat payment code through the Cloud QuickPass App in provincial capitals across the country to complete the payment; for online scenarios, Cloud QuickPass App fully supports recharge services of Q coins, QQ music and Tencent Video.

However, in terms of specific support, the actual measurement of the mobile payment network found that there is still a little experience difference, and mutual recognition of scanning codes does not mean mutual recognition of payments.

The editor in Shenzhen uses the QuickPass App to scan the WeChat Pay and Alipay’s collection codes respectively. In all the tested samples, all users can successfully make the payment by scanning the WeChat payment code through the Cloud QuickPass App. , Only some users’ payment codes can support it.

Taking into account Alipay’s statement “plan to cover all cities in the country in March next year”, the support progress needs to be followed up.

On the other hand, the editor tested using WeChat Pay and Alipay to scan the payment code of the cloud QuickPass App. Multiple test samples showed that the corresponding App must be downloaded to make the payment. It is worth mentioning that the mobile QuickPass App has been downloaded in the mobile phones of the test samples, and the interface for guiding the download is still the interface after scanning the code.

New pattern after payment interconnection

After scanning the QuickPass App receipt code interface, left Alipay, right WeChat

From the test point of view, the Cloud QuickPass App scans the collection code of WeChat Pay and Alipay, which basically realizes the payment interoperability. On the other hand, WeChat and Alipay scan the silver contact QR code to jump to the App download page after identification, not the payment page. However, before that, WeChat and Alipay could not be identified by scanning the QR code of the silver contact. In the online payment scenario, the support situation is better. 

To put it more bluntly, there is a certain experience difference between payment mutual recognition and scanning code mutual recognition.

New challenges of payment interconnection

Judging from the above test results, cloud QuickPass and bank apps can scan WeChat Pay and Alipay’s collection codes and complete the payment more smoothly, which is undoubtedly a major benefit; on the contrary, it is difficult for WeChat and Alipay to scan the bank contact QR code. The payment experience is a bit inferior, which prevents the siphon effect of the giants to a certain extent.

After determining the major benefits for the cloud QuickPass app and banking app, it actually brought new challenges to them. Take the cloud QuickPass app as an example. Up to now, its number of users has exceeded 300 million, and it can scan and pay at over 30 million merchants in 46 countries and regions. Both the user and the scene have the strength to become a super app, and the open scenes of WeChat Pay and Alipay have boosted the rapid growth of the cloud QuickPass app. However, it still needs to further improve in terms of user activity, user experience, and daily operations to “eat” the interconnection dividends.

In the short term, the strong position of the two giants is still there. In the long run, it will depend on whether the banking applications represented by the cloud flash pass app can regain a certain market while the scene support gradually reduces the gap.

On the other hand, in the author’s view, the advancement of this interconnection is still exploring how to implement the four-party online payment model.

The four-party model of online payment was mentioned in the 2021 payment and settlement work video conference held by the People’s Bank of China in April this year, requiring a sound four-party model of online payment. At the China Payments and Settlement Forum in September, Fan Yifei, deputy governor of the People’s Bank of China, once again mentioned that the establishment of a four-party online payment model is a consensus gradually formed by all parties in the development.

Looking at another detail, the QuickPass App scans the receiving codes of WeChat Pay and Alipay. In this four-party model, who is doing card issuing, acquiring, and clearing? Is there also a question of handling fees? For example, WeChat Pay and Alipay act as the acquirer, UnionPay clearing, and the bank card institution bound to the Cloud QuickPass App acts as the card issuer. Do cloud QuickPass or banks need to pay a certain fee to WeChat and Alipay?

Regarding the interconnection model, previous information has shown that there are two models. One is to formulate a unified standard. The QR code of the banking department and the payment institution system can be completely interconnected in accordance with the unified standard. Any payment institution or bank can scan the QR code of WeChat Pay and Alipay, and vice versa. The other is more toward business negotiations, and mutual recognition between some institutions. Judging from the situation of this interconnection, it may belong to the latter. Whether a universal interconnection model can be formed, there is also a game between supervision and the market.

Paying small players behind the giants

A dust of the times, falling on ordinary people is a mountain. Every move between giants is the same for small players who pay.

For aggregate payment players, if it is not for the interconnection between WeChat Pay and Alipay, aggregate payment is still valuable, but after the cloud flash payment App has recognized and scanned the two parties, especially in the form of antitrust, the interconnection will continue Advancement is the sword of Damocles for aggregate payment players. Once the policy is fully implemented, the gimmick of aggregate payment will be completely lost. In the future, aggregate payment players need to minimize “aggregation” as their marketing direction, and provide more digital services as a good way out.

In addition, it is necessary to pay attention to the service support to the bank community. In the past two years, banks have gradually lost confidence in offline mobile payments. In essence, there are still scene barriers, and the investment cost of expanding offline acquiring is extremely high. Today, WeChat Pay and Alipay are gradually opening up scenes to banks, which may bring a new wave of bank mobile payments. In addition, the current supervision encourages banks to upgrade their financial digitization, and with the favorable blessings of open payment scenarios, banks will pay more attention to their own clients. The payment by Union Bank will be a hot spot not only now, but also in the future.

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