Network Platform Operators Trand To Deal With The Payment Services Integrated Research

In recent years in China, e-commerce and online payment developed rapidly. In2013, there were302million users of online shopping, including260million users of online payment, in the growth rate of17.9%. In the era of online economy, the payment function is expanded and e-commerce becomes a new business model in fast development. The third-party payment platform becomes the media of the e-commerce, not only effectively solves the cash flow problem of the e-business, but also has new features such as precipitation of credit guarantee and big data. It plays a key role in the development of e-commerce. Compared with offline trade, payment security and network integrity become important issues. The third-party payment platform provides credit guarantee for network transactions, giving buyers a third party guarantee before receiving goods. As an essential part of e-commerce credit linking, the third-party payment platform expands its size of trade and optimizes its way to trade. At the same time, the cash flow, logistics and information flow are precipitate in the third party payment. The payment platform is no longer just flow channel, but also stores its real-time record of the specific data flow, including the prices of goods and quantity, the trade time line and addresses. Big data provides the reliable basis for user demand mining and business model innovation.A growing number of self-built e-commerce payment platform realize the integration of trade and payment services. As of July2013, the People’s Bank of China had issued277third-party payment licenses. However, the development of a third party payment platform requires huge fixed costs. At the same time, based on the characteristics of the network externalities, the third-party payment market shows the characteristics of the winner-take-all and high concentration, leading to high monopoly and to reduce the effective competition of the market.The top3biggest scale of China’s third-party payment increased gradually in recent years. In2013, it reached79.61%, occupying more than half of the market, especially for Ali-pay, which ranked the first place from2007to2013.There is contradiction between the expanding of third-party payment and the centralization of the economy. Therefore, it is meaningful to explore whether e-commerce operators have a tendency to trade and payment service and whether the government could pay continuously awarded, analyze social problems brought by the integration of the trade and payment service, formulate corresponding policies and regulations to perfect the credit system and improve the market competitiveness and reduce waste of resources.This paper has four parts to analyze the economic effect and policy regulation, which are about the integration of transactions and payment service. First of all, we based on the Armstrong (2006) two-sided market theory amount model, combined with the feature of the third party payment platform, used the external intensity of crossing network into the bilateral market-pricing model. By comparative analysis, we discussed about the trade and payment service separation and integration of third-party payment plat form, and the impact of e-commerce operators profit pricing behavior. To simplify the calculation, we assumed that the research object only provided proprietary electronic business operators and the third party payment platform. We studied about trading and payment services integration tendency, pricing strategy and the integration of the economic effect. It is concluded that the third-party payment platform, vertical integration and the third party longitudinal separation pricing strategy is consistent.Assuming that the third-party payment platform part of competition appeared and buyer’s ownership has more subsidies, profits could be maximized by means of cross pricing of this cross pricing strategies. Vertically integrated e-commerce operators’profits are greater than the vertical separated ones. So e-commerce operators tend to the vertical integration of the third party.Secondly, different with the traditional face-to-face trade, the trade information in the network economy era is asymmetry between the seller and the buyer before trade. Sellers may use this asymmetry to bring certain loss to the buyer, leading network market to adverse selection problem and reducing the efficiency of market transactions. The electronic commerce trade and payment service integration of improve commercial credit, the environment of e-commerce transactions and the benign development of electronic commerce. To a certain extent, it also alleviates the adverse selection problem. Relative to the e-commerce transactions and payment of separation, the integration of trading and payment services can create more constraints, leading seller to credit trade.Thirdly, we mainly analyzed the contradiction between the expansion of the third-party payment and the centralization of the scale economic. We also theoretically explained it. For bilateral platform, due to the network externality, the users utility on both sides of the platform depends on the number, the scale and the scale economy effect. Analyzing the perspective of cost, the initial platform building needed high fixed costs with a low marginal cost. With more bilateral user scale, average cost also fell sharply and platforms achieved economies of scale. Additionally, at the points of the third party payment security risk, credit risk and the risk of money laundering crime, we analyzed the social problems brought by transactions and payment service.Finally, on one hand, based on the integration of the transaction and payment service, it could bring greater profits and alleviate the adverse selection problems. E-commerce operators tend to vertical integration. However, the third party payment platform has the characteristics of network externality leading to third-party payment market and showing winner-take-all characteristics. Too many e-commerce operators joining the market would reduce the effective competition of the market. On the other hand, the integration of trade and payment services would also bring a series of social problems. Therefore, we gave regulatory advices from four aspects, which included a third party access mechanism, encouragement of the third party payment of Internet technology innovation and the third-party payment platform of cooperation, at the same time, support public data resources to a third party payment development and dynamic regulation.There are three innovation points in this paper. Firstly, most researchers extend research on bilateral market pricing theory of bilateral market behavior and platform of user utility from the pure single or multi-platform hypothesis. In reality, users may also use many third-party payment platforms. And for sellers, in the longitudinal separation management pattern, some of the e-commerce platforms can also select multiple third-party payment platforms to trade at the same time. In the vertical integration, e-commerce transaction platforms tend to choose only one platform. Secondly, in the perspective of e-commerce operators, this article is based on the Armstrong (2006) to establish bilateral market theory and combined with the features of the third party payment platforms. It use the intensity of the crossing network externality into the bilateral market pricing model. Additionally, it will analyze the tendency of trade and payment services integration, as well as the influence of the third-party payment platform pricing behavior and profits. By comparing and analyzing, we discussed the impact of different longitudinal operation models to third-party payment platform pricing behavior and the impact of third-party payment platform margins. Finally, we analyzed the economic influence brought by transaction and payment service, and discussed the problems about trade and payment service integration and network adverse selection.