Paying the credit card fee to reduce the user data to compete the key

Beijing Time August 20 news, according to foreign media reports, the payment industry is now undergoing a profound change, now anyone with a mobile phone can accept credit card payment; O2O business models allow people to pay online and then buy goods offline, In addition, the popularity of mobility has greatly swept away the barriers in consumer shopping experience.

The emergence of this new set of things, coupled with government intervention, has reduced the cost of swipe fees in the payment industry, thus compressing the revenue streams of payment solution providers. But there is also a greater opportunity for paying companies to use their payment data to create a more valuable, indestructible business model that is independent of fees. Eventually, the pattern of offline commercial and online advertising will be reshaped.

At present: Fees are still the main source of revenue for the company, but the trend is declining

The payment company is currently the main source of revenue by charging a certain fee to sellers and buyers. Square will charge the merchant a 2.75% fee, or a monthly package of 275 dollars. PayPal here and Intuit GoPayment is the same as each charge 2.7% of the handling fee. Groupon and Amazon are also said to be releasing their own payment tools, so the increasingly competitive environment will lead to lower fees in the future. Pay with Square is a potential game-changer that allows users to make payments without having to carry anything and simply go into a retail store and name their own. With credit card payments beginning to become increasingly popular, this will further reduce the mobile payment fees.

One of the reasons for the decline in payment fees is the increasing competition between the payment companies and the intervention of government agencies. Not so long ago, the Australian government thought the payment process was too expensive and intervened to cut it down, with less than 0.5% per cent of each swipe rate, far below U.S. rates. Similarly, the EU has enacted legislation similar to the rate of downward adjustment. The Durbin amendments to the Dodd Act and the eventual defeat of a number of banks such as the United States and MasterCard International to pay at least 6 billion dollars to the merchant are cases of government intervention and civil litigation in the United States in terms of payment of expenses. Many of the cost-cutting provisions helped broker brokers such as PayPal and square in the short term, reducing the cost of using the Visa/mastercard architecture, but eventually limiting their business.

In any case, most businesses still dislike paying fees. Fees are part of the business costs of businesses, and they certainly want it to be as low as possible. Payment companies generally do not drain new customers for businesses. Google will charge 20% to 30% per cent of the cost of introducing a customer to an electronic merchant, but businesses are making the rate higher by bidding on advertising, because the money they put into it makes them more profitable. Paying companies are only a small part of Google, but they are often challenged in various forms, faced with lawsuits and legislative restrictions.

The conclusion is very simple, contact the buyer and seller's bank Account no more than the contact seller and buyer generated transactions to obtain more value, Google location at the top of the funnel, for businesses to introduce a large number of users, while the payment company is located at the bottom of some more insipid but indispensable work.

Future: User's payment data will be able to revolutionize business and advertising models

As people increasingly use cash, the amount of money paid to the company will become more and more large, and its commercial value will become more and more obvious, eventually ending the offline trading mode. Paying the company's processing data will show unparalleled value, such as whether someone bought a product or not. How much money did you pay? What did you buy? And these data are not available in this way in the age of cash use. In order for the O2O business model to take off, every business needs to have the ability to track online/mobile operations to offline purchases, and payment companies such as PayPal here, Square and GoPayment will be able to provide powerful data support for this small business.

Imagine Wendy's (Wendy's) or a local handyman trying to advertise on the Internet. How do they track the effects of advertising? What does a single click or a keyword display mean? Obviously, each click can be used to measure whether the user has a purchase behavior, that is, to track whether online advertising has an effect.

In an increasingly cashless society, the infrastructure of payments will better measure whether a commercial advertisement has an effect on advertisers. Track deals and purchases to see if it's Google, Yelp or Patch? This will completely reshape the offline business and online advertising model.

Millions of businesses use square, PayPal, and gopayment to pay for their services, and they want to attract more customers, face them again, understand their needs and be willing to do what the electric-business enterprise has for decades taken for granted. Traditional POS systems have very poor integration and vertical performance, typically, businesses are required to establish an independent relationship with each company in the payment chain, such as hardware, merchant, and customer management systems, and the cost of investing is too high for a small proprietorship.

Payment companies can use these already generated users to pay data to promote more consumer transactions and purchases. These payments companies (such as Anglo Express, PayPal, Square, Discover, etc.) and each consumer have a direct relationship, they can provide users with a similar Amazon recommendation engine, to recommend any products to users. For example, when you buy a QSL authority brand tennis racket, the payment system may recommend a discounted tennis training course that is only available to users who buy the tennis racket and use the payment tool. You may not take the initiative to search the course, nor do you like the promotional emails from the course brand, but it may be useful for you to appear in the purchase of a tennis racket soon. In this way, users are blocked from entering the search by recommending a large number of related items to the user.

This is not to say that the current rate of payment is not reasonable, but that as more companies join in the increasingly competitive field, this business model of relying mainly on fees is not a long-term solution. In the long run, businesses will need to make more profits as the rates are lower, so the hope for the future of the payment industry, whether for businesses, consumers or payment solution providers, is how to better use those consumer data.

Source: Tencent Technology