The Analysis Of Compatibility Strategy About Payment Platform In Two-sided Markets

With the popularization of the Internet and the development of e-commerce,the user groups of third-party payment have become more widespread.There are many payment platforms in the market,these payment platforms attract users through different marketing methods.Alipay and Tenpay are large-scale payment platforms.But,they are not compatible with each other.Users need to use the same mobile payment platform or register multiple platforms to complete the payment.Incompatibility of payment platform makes it difficult for users to pay.Therefore,the research on the compatibility of third-party payment platforms has important practical significance.Based on the theory of bilateral market,the Hotelling model is used to study the compatibility strategy of the two payment platforms.The conclusion is thatwhen there are only two payment platforms in the market,the platform profits unchanged after compatibility,so incompatibility is the optimal decision.When the platforms are compatible,the user's total utility and social benefits increase.Then Salop's circular city model is used to analyze the strategy choices in three situations(there are only two payment platforms in the market and a new payment platform adopts different compatible strategies to enter the market).The conclusions of the study are as follows:First,there is a new payment platform that enters the market with a symmetrical market size.When the total consumer market share of the two payment platforms is greater than the total market share of the merchants,the compatibility of the two platforms is the optimal strategy.It can increase the total utility of consumers.Second,when the market scale is asymmetric,there is a new platform that adopts incompatible strategy to enter the market.The optimal decision of the incumbent platform is to adopt a boycott strategy.It can increase the total utility of consumers.If a new platform that adopts compatible strategy to enter the market,when the total consumer market share of the two payment platforms is greater than the total market share of the merchant,the boycott strategy is the best strategy for the incumbent platform.Fourth,when the market scale is asymmetric,only one of the two incumbents chooses compatible strategy,the situation of the larger platform is compatible with the new platform can increase the total utility and social welfare of consumers.Finally,numerical simulation is used to get the conclusion that When the two payment platforms are large and the market is symmetrical,the two payment platforms are not compatible.But the total consumer utility and social welfare increase bacause of the platform compatibility.The two cases of unionpay cloud flash pay and other payment institutions network payment and settlement platform also be used to verify this statement.