Merchant acquiring Business Landscape in China

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[object Object],[object Object],Value Added Service Value Chain of Merchant Acquiring Below chart shows the traditional merchant acquiring transaction flow and its value chain. Later on, we will discuss the Merchant Acquirer and Payment Network in China. ,[object Object],[object Object],[object Object],Basic Service Merchant Acquirer Payment Network Issuer Cardholder Merchant Purchase Transaction flow

-- From US experience, Small merchant contributed less than 10% of sales volume but committed 42% of net revenue for merchant acquirer. This was due to small merchant needed to pay for higher merchant discount rate… ,[object Object],[object Object],[object Object]

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With the research paper from iResearch, the China e-commerce market size expect to grow to 1.9 萬 billion in 2014. ,[object Object],[object Object],[object Object]

The China Government granted third party payment license to 13 companies in Sep 1, 2011, in which all of them are Chinese owned enterprise. For foreign based enterprise like Paypal china still not yet granted the license, who is considering to setup a Joint Venture in China…. ,[object Object],[object Object],[object Object]

-- In the merchant acquiring business, payment network plays a key role in the value chain of payment processing. Below use the Four Quadrant Market Analysis for VISA/MasterCard/AmEx/JCB , in the following slides, we will discuss in details for Production Innovation and Market Penetration for the next two slides Chinese Government Relationship Product Innovation Brand Recognition Market Penetration

-- For the product innovation, below listed out the initiatives in Contactless Payment, Mobile payment, online secure payment gateway as well as strategy alliance for each card scheme provider ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Strategic Alliance & Investment Contactless Payment Online secure payment gateway Mobile Payment Product Innovation

-- From the research paper done by Chinese research company, it shows that the market penetration rate of Unionpay card occupied 70% of card issued, while VISA and Mastercard follow the second and third place respectively. Below discuss why this happen in China Market and how international scheme organization response. “ Forces” Strategy Response to the “Forces” A. “China UnionPay play the role of both policy maker and market player” Meanwhile VISA/Master still continues to issue the dual currency cards, focus on moving battlefield from traditional card payment channel to internet transaction and mobile payment channel as the card no prefix would be the identifier for which payment channel to be routed. B. “RMB clearing and settlement business only open for China Unionpay exclusively” C. “Lower interchange fee charged compared to VISA/Mastercard” ,[object Object],[object Object],[object Object],Market Penetration

-- The non bank institution , the third party payment companies, should focus on providing the specialize services for mostly internet merchants as well as Small & Medium size of retail merchant to differentiate themselves from traditional acquiring bank… Value Chain of Merchant Acquiring

-- Strategic Alliance with other companies which are in vital player in value chain, is important step to quick launch the innovative product. “ Possible Move” of Market Player Strategy for the “Possible Move” B. “ 拉卡拉 ” ,[object Object],[object Object],[object Object],A. “99Bills” ,[object Object],[object Object],[object Object],[object Object]

-- The Foreign processor/Technology company like HP or First Data , should be able to help the 3 rd party payment companies to build a healthy ecosystem ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],B. PCI Data Security Compliant C. Provision of Valued Added Service “ Value Proposition” “ Area of Synergy”

Merchant acquiring Business Landscape in China

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Merchant acquiring Business Landscape in China

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