A Study On China’s Third-Party Payment Industrial Competition

The third-party payment, which provides safe and efficient payment service for e-commerce, is a booming business with huge market potential in China. Although a lot of market players have actively been engaged in the third-party payment business, the industrial portfolio is far from the point of harmony. The requirement with respect to policies and market leads all parties involved to re-adjust their positions. Therefore, it is necessary to study the business characteristics and developmental pattern regarding the third-party payment business. The study can not only provide important information for the market players, but provide the regulatory authorities with policy-making references.The present study focuses on the competitive environment of the third-party payment industry. The conceptual and theoretical framework is discussed. The economic characteristics, the operational model, and credit security constitution of the payment network are analyzed in detail. After introducing the domestic and foreign developmental status of the third-party payment, this study points out the competition and cooperation among enterprises and the business itself, in the current concerning regulatory environment of laws and policies. The competitive and cooperation relationships in the business value chain with three-tier structure value are analyzed via an in-depth examination of interests and conflicts among enterprises. This study summarized the strengths and weaknesses, challenges and opportunities, and gives strategies and recommendations to optimize on the institutional construction, development of transformation, innovation, diversification, integration and internationalization of China’s third-party payment business.Overall, the present study analyzes, by integrating theories with practices, the developmental issues of the third-party payment. The credit security mechanism is analyzed using game theory and cryptography theory. The competitive and cooperative relationships among enterprises are discussed using Michael Porter’s five forces model and the theory of business value chain. The interest conflicts between commercial banks and the third-party payment enterprises are analyzed based on the theory of network externality and usage externality and two-sided market price mechanisms.The present study provides informative references leading to a reasonable solution to balance the market interests and resolve the conflicts and promote cooperation. This study may shed light on promotion of the healthy development of third-party payment business.