Home Digital Transformation Payment Study Group Column (Part 1) – The Shadow of the Payment Revolution on Industry

Payment Study Group Column (Part 1) – The Shadow of the Payment Revolution on Industry

Stratus Japan is developing a solution service business as part of its business, and one of the pillars of this business is providing solutions in the payment field and developing and building systems. Headquartered in China, SUMMIT DATA is a partner in this business. Both companies have an international division of labor that straddles Japan and China.

As you all know, in recent years, with the spread of mobile payment services called Alipay and WeChat Pay, cashless payments are rapidly progressing in China.

According to the People’s Bank of China and others, the scale of mobile payments in China has increased 22 times in the past four years, the number of payments in 2013 was 1,674 million, and the payment amount was 9.64 trillion yuan (about 164 trillion yen). However, it is said that the number increased to 37,552 million cases and 202,930 billion yuan (3,450 trillion yen) in 2017.

The above amount is far higher than China’s 2017 GDP (82,721,100 million yuan), but it actually includes inter-company payments and remittances between companies and individuals. Money (in this case, e-commerce) circulates many times, so if you add it up, it will exceed the total amount of money that the final consumer will shop (private final consumption expenditure), and it will be much larger than GDP. However, even so, it is on a tremendous increase.

In Japan, the ratio of the number of electronic payments to private final consumption expenditure is often discussed, and according to the Bank of Japan, the total payment amount of electronic payments including credit cards and debit cards was 56.6 trillion yen in FY2016. The government is aiming to increase this to 40% by 2020, which is about 20% of private final consumption expenditure, but in China, the ratio has already reached 55-60% as of 2015. There is also a report that says.

In this payment study group, what is happening now is based on the above trends, centered on the members who are familiar with the trends in the payment field in Japan and China, among both Stratus and Kasumi Technology Co., Ltd. I am studying whether to go. In this column, we plan to take up topics that may be of interest to readers in the content discussed in the study group.

Recently, various media have been disseminating information on the changes that are currently occurring in the payment field with keywords such as “smartphone, the mobile payment”, “cashless payment”, “electronic money”, and “QR code payment”. Many of these articles are written from the perspective of what it means to users of the payment mechanism (consumers and retailers, stores), what will change, and what will be useful.

It’s not surprising that there are far more people who interact with the payment system from the user’s perspective (rather than from the provider’s perspective), but some readers are watching the trends from the provider’s perspective. I think there are many people. Therefore, I would like to consider the impact of changes in the payment field on the provider side (payment industry in a broad sense).

As an example of an easy-to-understand direct impact, the number of new ATMs installed in China has dropped sharply in recent years as a result of the rapid development of mobile payments mentioned above. In 2015, there were 25.16 million units, but in 2016 it was 575,000 units, and in 2017 it was 364,000 units. rice field. On the other hand, the performance of QR code equipment manufacturers (chips, scanners, etc.) is skyrocketing. In the first half of 2017, the manufacturer “New Continent” listed on the Shenzhen market reached 2.52 billion yuan (about 42.8 billion yen) in sales, up 59.18%, and net profit was 428 million yuan, up 81.65%.

Of course, the growth rate of Alipay and WeChat Pay, which have a large share in the mobile payment business, is even more tremendous, and Alipay’s service started at the end of 2004, but the corporate value of Ant Financial Service, which operates it, is 60 billion dollars as of 2017. It is also evaluated as about 6.6 trillion yen. Compared to the market capitalization of companies that provide financial services in Japan, the company is comparable to the market capitalization of Yucho Bank and Sumitomo Mitsui FG, which pursues it even if it does not reach the number one Mitsubishi UFJ Bank (market capitalization of about 10 trillion yen). It has grown in just over a decade before it has value.

If there is such a big change, the impact on existing players will be worrisome, but until then, cash payments were the mainstream, and credit cards were not widespread in China. Union Pay, which is widely used as a debit card, was established in March 2002, which is not much different from the start of Alipay’s service. In addition, international brands such as VISA, MASTER, and American Express were severely restricted from entering the card clearing business in China until the law was amended in June 2016.

In this way, the payment field was a relatively undeveloped market in China, and as a result of the three major players (Union Pay, Alipay, and WeChat Pay) expanding their power in the form of sharing (competing) New markets. The rise of new players did not hurt existing players.

While the financial sector is opening up in China and international brands are looking for opportunities to enter the Chinese market in earnest, Japan is also responding to Union Pay, Alipay, and WeChat Pay in order to accept visitors from China. I’m moving forward. The wave of internationalization is steadily rushing in the field of payments, but in combination with the recent major changes in the field that can be called the payment revolution, what kind of impact will be seen and what kind of changes will occur in the future. I’m not completely interested. In the next column, I would like to dig a little deeper into that area.

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