The third-party payment has entered the intensive release period of financial reports. Under the regulatory background of continuing to emphasize “return to the origin of payment”, acquirers are also adjusting the posture of exhibition industry and exploring new models.
Third party payment institutions (and their parent companies), including Xgd Inc(300130) ( Xgd Inc(300130) . SZ), Gaoyang Technology (0818. HK), mobile card (9923. HK) and other third-party payment institutions, recently disclosed their financial reports for 2021. From the overall trend, the transaction volume and revenue of relevant institutions with main business of acquiring continued to increase significantly in 2021. In addition, under the background of the shift from offline transactions to bar code payment, the acceptance strategy is facing iteration, and the expansion and operation investment are further increased, which also leads to the decline of gross profit margin in varying degrees.
Macro surface data also reflects a certain pressure. On April 2, the central bank released the operation data of the payment system in 2021. As of the end of 2021, there were 279827 million online special merchants, a decrease of 964800 compared with the end of the previous year. There were 389361 million networked POS machines and tools, an increase of 605800 over the end of last year. Although the growth is still, the growth rate has slowed down compared with the turning surge of more than 3 million units in 2020.
The repeated uncertainty of the epidemic, the elastic changes of bank credit card issuance management, and the impact of policies on illegal businesses such as “cash out” and “code set”, make the business market of the acquiring industry unclear in 2022. An insider of an acquirer told China Business Daily: the pressure of operating real merchants must be increasing. Our current strategy is to firmly transform barcode payment and use the profits of traditional businesses to support innovative businesses.
trading volume increased and gross profit margin decreased
Compared with 2020 when the epidemic broke out, the performance fundamentals of institutions generally improved in 2021.
The financial report of card transfer shows that in 2021, the revenue of one-stop payment service of card transfer was 2.268 billion yuan, a year-on-year increase of 24%; The trading volume was 2.12 trillion yuan, an increase of 45% over the same period last year.
According to the Xgd Inc(300130) financial report of its parent company, Jialian payment, another top ranked company, achieved an operating revenue of about 2.37 billion yuan in 2021, with a year-on-year increase of 39.07%; The accumulated transaction flow was about 1.97 trillion yuan, an increase of 61.48% over the same period last year.
According to the financial report of the accompanying parent company Gaoyang technology, the company’s payment transaction processing solution business achieved a turnover of HK $3342.8 billion. Compared with 2020, its payment business gradually recovered, but it still did not reach the level before the epidemic. Its accompanying payment transaction volume in 2021 was about 1.67 trillion yuan, an increase of about 14% over the previous year.
Transaction volume is the main indicator for evaluating the market size of acquirers. According to the agency ranking data obtained by the reporter from insiders of Payment institutions, in 2021, the above three institutions that have published financial reports were among the top ten acquirers. In addition, among the top ten major institutions, there are still Lakala Payment Co.Ltd(300773) ( Lakala Payment Co.Ltd(300773) . SZ), parent company of Guotong Xingyi Newland Digital Technology Co.Ltd(000997) ( Newland Digital Technology Co.Ltd(000997) . SZ) and parent company of Haike RONGTONG Beijing Cuiwei Tower Co.Ltd(603123) ( Beijing Cuiwei Tower Co.Ltd(603123) . SH) that have not released financial reports, which has an impact on observing the business trend of acquirers to a certain extent.
The normalization of the central bank’s strict supervision and the impact of the epidemic have doubled the pressure on acquirers mainly for offline small and micro markets. The migration of payment habits brings challenges to its exhibition mode. A person from a Beijing payment institution told reporters: the trend of offline transactions to bar code payment is unstoppable, and it is also the core way to develop real merchants. If we continue the previous traditional POS exhibition mode, the capacity will only shrink, otherwise we can only do the business of drinking poison to quench thirst.
Taking the above-mentioned institutions as an example, the trend of accepting barcode payment business has been relatively clear. According to the financial report, the transaction volume of accompanying payment QR code payment in 2021 increased by more than twice compared with the previous year. By the end of 2021, the monthly average transaction volume was about 139 billion yuan. The transaction volume of mobile card application based payment service (i.e. bar code payment) increased by 59.0% year-on-year.
According to the reporter to pay industry people know: barcode payment compared to the traditional POS machine acceptance, from the acceptance of bank card to accept Alipay and WeChat payment, the rate is further reduced and very transparent, the 2% rate level, the receiving side of the receiving institutions do not have bargaining space, basically flat out, compared to the traditional collection, the profit space will be narrowed significantly.
From the perspective of the institutions that disclosed the changes of gross profit margin, the one-stop payment (traditional receipt + bar code payment) of card transfer in 2021 not only increased the revenue significantly, but also decreased the gross profit from 26.4% to 16.7%, mainly due to the increase of commissions paid to sales agents and distributors. Jialian payment showed a year-on-year decline in the gross profit margin in the short term due to the increase of about 200 million yuan in the subsidy amount of acquiring business over the previous year.
In this regard, the card transfer aspect told reporters: at present, the penetration rate of the overall market is still low. The company strengthens the channel network by increasing the Commission distribution proportion of agency channels, and promotes the peak number of single day transactions of aggregate code payment to a certain extent to be close to 50 million. With the head effect fermentation, the downward trend of gross profit of the business is expected to improve.
Jialian payment responded to this: in 2021, the company’s subsidy scheme is mainly used to provide subsidies through market channels, reduce the service fee for offline consumer transactions of merchants, put in collection equipment for free, and provide SaaS software and hardware products for free. At present, the change trend of the gross profit margin of the company’s acquiring service is consistent with the industry average level.
“return to origin” value-added business turns to
Among the factors driving the business change of acquirers, regulatory attitude is an important variable. In recent years, the central bank’s regulatory attitude towards the “return to origin” of third-party payment institutions has been continuously clarified. One of the key requirements is to disconnect the improper connection between payment instruments and other financial products. This has also led to the embarrassment of the “payment + finance” in full swing in previous years among various innovations that superimpose other value-added services with payment portals.
From the financial reports of the above-mentioned institutions, in addition to the acquiring story, they did not give up the direction of diversified operation, but turned to value-added services such as digital decision-making, digital marketing and private traffic operation.
For acquirers, in the process of transforming to accepting bar code payment business, digital business has to be, but not all scenarios are suitable for small and medium-sized Payment institutions. The main trouble of Payment institutions is that channel positioning is often excluded from the business cycle. It is difficult to participate in industrial transformation. Compared with Alipay and WeChat payment, small and medium Payment institutions do not have the advantage in understanding and understanding C terminals.
The accompanying payer said to the reporter: after several years of exploration, we have determined several major industrial markets such as Shangchao, fresh food, mother and baby, because the mobile payment demand of these scenes has not been fully met, and there is still room for reclamation.
“The acquirer has the gene of industrial Internet, and the core position is the b-end merchant. One of the exploration directions we choose is to provide the merchant with digital intelligent decision-making including product selection, replenishment and marketing strategy through the analysis of various business data of the merchant and using the self-developed algorithm model, so as to promote the front-end marketing to obtain customers and the overall operation efficiency. The charging mode depends on the effect.
At present, this algorithm has been verified by tens of thousands of stores and served large supermarkets in some third and fourth tier cities. In effect, after the system is used, the merchant’s shortage loss rate can be reduced by two-thirds and the commodity turnover days can be reduced by one-third. ” The accompanying payment disclosed.
Different institutions choose different scenarios. Jialian payment said: “the trial of the merchant solution side, Jialian cloud store, locates the SaaS system of smart stores, focuses on catering information management, and integrates users’ connection + smart catering software + intelligent hardware.” It should be noted that the traditional business of Jialian payment parent company is the production of POS hardware. Although the revenue of this business segment declined in 2021, it can still provide support to the acquirer Tuoke upstream of the industrial chain.
Card transfer revealed to reporters: its value-added services also cover code scanning and ordering, cashier management, purchase, sales and inventory management, marketing and customer retention, online stores and distribution, service tracking and credit evaluation. The financial report shows that its store to store e-commerce service is mainly to promote members in social networks and private domains, and further pull new ones.
According to the reporter, in the process of implementing value-added services, because the simple bar code payment business does not make money, some Payment institutions actually put the payment kit in the whole solution. In some businesses, the decision-making solution can be sold separately, and the payment is not a necessary option.
However, in terms of business proportion, there is still a large gap between value-added services and traditional services. For example, the financial report disclosed the card transfer of the revenue of value-added services outside the payment business, and its merchant solutions and store to store e-commerce services accounted for about a quarter of the total revenue. Another acquirer revealed to reporters that its value-added innovation business line has invested more than 100 million yuan in recent years, and it is expected to achieve breakeven next year.
Transformation is difficult but imperative. An industry consensus is that the next policy will also be more inclined to promote acquirers to operate real merchants and do healthy business. The notice of the people’s Bank of China on strengthening the management of payment acceptance terminals and related businesses (Document No. 259) implemented on March 1 this year stipulates that one bank card acceptance terminal can only correspond to one special merchant, that is, “one machine and one code”, so as to further reduce the space for illegal businesses such as cash out and code set.
On the other hand, is the high growth trend of credit cards sustainable? In December 2021, the China Banking and Insurance Regulatory Commission clearly required that banking financial institutions should not directly or indirectly take the number of cards issued, the number of customers, market share or market ranking as a single or main assessment index. This will also directly affect the market capacity of traditional POS services.
A senior person in the payment industry told reporters: previously, we had a price war and gambled on the increment of the industry, but now the dividend has subsided and the overall trading volume of the market is relatively constant. Regulators guide institutions to expand real merchants and bar code payment, but the exploration of value-added services needs an investment period. If a solid investment needs tens of millions of yuan per year, it also needs hundreds of millions of costs in a few years. Whether the institutions have this strategic determination and the determination to transform, each family has different choices.
