Source: Associated Press of Finance
Reporter Cao Yunyi
Listed payment institutions have successively released annual reports in 2023 and quarterly reports in 2024. On the whole, the third-party payment industry has resumed growth with domestic consumption, and the gross profit rate has shown remarkable year-on-year growth. A number of institutional personages told the Associated Press of Finance and Economics that the recovery trend of the consumer side economy was obvious, and the growth of offline small and micro businesses was realized. From the perspective of trend, payment institutions will continue to focus on the B-end and explore the joint mode of "payment+SaaS" to enable SMEs to upgrade digitally.
According to the latest data, payment institutions have targeted the trillion level blue ocean of cross-border payment, and the competition is becoming increasingly fierce. However, many experts and insiders told the Associated Press of Finance and Economics that there are still challenges for payment institutions at the cross-border payment level, such as adapting to foreign regulation and improving technological competitiveness.
Consumption recovery environment improves gross profit margin
Recently, New World It was announced that in 2023, the company realized an operating revenue of 7.611 billion yuan, a year-on-year increase of 14.26%, and realized a net profit attributable to the parent company of 1.004 billion yuan, turning losses into profits on a year-on-year basis. Lucia Lacarra The latest quarterly report also showed that the number scanning transactions continued to grow significantly.
With the economic recovery in the first quarter, the third-party payment industry resumed its growth with domestic consumption. From the first quarter and the annual report, the digital payment business was strong, and many companies turned losses into profits.
"The growth rate of offline small and micro businesses was close to 40% year on year, and the trend of economic recovery at the consumer end was relatively obvious." The relevant person in charge of Huifutian told the Associated Press of Finance that from the overall transaction volume, the consumption recovery in the first quarter was relatively obvious, which was important to drive economic and social development drive For example, in the aviation and tourism industry, the transaction volume in the first quarter increased by 25% year on year and 39% month on month, showing a good growth trend.
Lakala said in the annual report that under the background of the overall recovery of the domestic economy and the obvious recovery of offline consumption, the market share of its main business continued to expand. In 2023, Lakala will achieve an operating revenue of 5.934 billion yuan, a year-on-year increase of 10.6%, and a net profit attributable to shareholders of the parent company of 458 million yuan, turning losses into profits.
According to the data of Lakala's first quarter report in 2024, the institution realized a payment transaction amount of 1097.3 billion yuan, including 348.9 billion yuan of code scanning transaction, up 43% year on year. The reasons are as follows: First, the overall share of code scanning transactions increased from 21% in the same period last year to 32%; Second, thanks to the continuous increase in the scale and proportion of code scanning transactions and the adjustment of the rate of some products, the overall net payment rate has increased.
In its 2023 annual report, New World also said that it would actively seize the opportunity of consumer recovery and increase investment in product innovation and customer service. In 2023, the total transaction volume of payment service business in the whole year would exceed 2.5 trillion, an increase of about 8% over the same period of the previous year. The peak number of transactions would exceed 15 million per day, and the peak value of transaction amount would exceed 9.7 billion yuan per day.
It is worth noting that the gross profit rate of each institution has performed well. The overall gross profit rate of Lakala in 2023 will be 28.4%, an increase of 5 percentage points over the previous year, and the gross profit rate of digital payment business will be 26.3%, an increase of 6 percentage points over the previous year. The overall gross profit rate in the first quarter was 34.1%, up 3 percentage points year on year.
On the evening of the 23rd, the first quarter report released by New China National Equities showed that the operating revenue in the first quarter was still declining, and the operating revenue in the first quarter of 2024 was 783 million yuan, down 22.74% year on year; However, due to such factors as the increase of gross profit margin of acquiring and value-added service business, the increase of investment income, and the decrease of sales expenses, the net profit in the first quarter was 221 million yuan, up 66.4% year on year. In 2023, the operating revenue will reach 3.801 billion yuan, down 11.94% year on year. However, in 2023, the gross profit margin of the company will be 38.80%, up 13.53 percentage points year on year.
Su Xiaorui, a senior researcher of Suxi Smart Research, said that the relevant data of head payment institutions showed a striking performance, reflecting the status quo of the continuous improvement of the business model and the increasing profitability of institutions, which will also encourage more payment institutions to take serving the real economy as their initial intention, and continue to make progress in exploring better products, more thoughtful service models and other aspects.
Payment institutions add "SaaS" to consolidate market competitiveness
In addition, a number of payment institutions seized on the industry inflection point last year to increase the size of SaaS cooperation.
In the third quarter of 2023, New World will introduce Shanhao Intelligent Team by means of minority equity replacement, which will focus on merchant operation and create a scenario SaaS aggregation platform, mainly providing digital marketing, electronic invoice, supply chain management and other services for merchants.
Lakala will further improve the convenience of SaaS access in external vertical industries and create vertical solutions of "payment+SaaS" for different sub industries. The high growth of digital solutions revenue in the "payment+" industry is mainly due to the 33% year-on-year increase in SaaS revenue, a digital exhibition platform serving cooperation channels.
PingPong released a new version of the saas system last year that can help institutional customers such as banks quickly obtain a full scenario cross-border clearing and settlement scheme, realizing the dual service mode of "API+SaaS" of Currentz.
Su Xiaorui believes that at present, major payment institutions have been increasing the construction of the SaaS platform, mainly to consolidate their market competitiveness, but also to provide more systematic, high-quality payment and value-added services for all kinds of enterprises and merchants in their payment ecosystem.
New Land said that in recent years, the digital upgrading of small, medium-sized and micro businesses has pressed the accelerator button. The single business model, lack of online business ability, backward marketing model and other difficult pain points have become the biggest obstacle to the sustainable and healthy development of small, medium-sized and micro businesses. Based on this, in the digital process of the vast number of small, medium-sized and micro businesses, digital tools, including SaaS services, have become low-cost As a convenient and efficient means, it is also an important way for payment institutions that have close relationships with small, medium-sized and micro businesses and enterprises to strengthen digital services.
The industry believes that the entry point of payment institutions is how to provide customized scenario solutions for merchants and achieve cost reduction and efficiency increase.
Zhou Ye, the chairman and CEO of Remittance World, pointed out to the Associated Press of Finance that China's SaaS will face some difficulties after 2021: difficult financing, low willingness of small and micro customers to pay, and high customization costs for large customers. First of all, all merchants, including small and micro enterprises, rely on full platform channel marketing, but diversified channels make collection and fund collection a big problem. Secondly, the transformation of digitalization requires the use of a large number of software, including public domain SaaS and private domain software, but there is still a very large space, among which the problems to be solved include cost and business environment remodeling.
"But SaaS must be the inevitable path of ToB digitalization, and it will be completely different from the previous digital ecology of ToC." Zhou Ye believes that the essence of industrial digitalization is a change driven by software, and every link connecting internal and external enterprises depends on software.
He said that at present, the trend of business software is in the ascendant, and the digital ecology for B-end enterprises is taking shape. Artificial intelligence technology has begun to be gradually applied, upgrading SaaS and software enterprises to PayFac (Payment Facilitator, payment service provider), realizing the full integration of software capabilities and payment capabilities, or it will become an inevitable trend of industrial digitalization. For example, Dougong 2.0 saves the customization cost and development efficiency of software enterprises for large customers, and provides SaaS/software enterprises, as well as small and medium-sized customers, with a model choice of pay as you go, thus changing the business model.
Payment institutions have seized the blue ocean of cross-border payment
In the cross-border export B2B market, the demand of SMEs for specialized services is more urgent. From the reports of various payment institutions, cross-border payment is a blue ocean of opportunities.
The Research Report on China's Third Party Payment Industry in 2023 released by iResearch shows that the overall realizable market size (TAM) of China's cross-border export B2B trade payment in 2022 will be 4.9 trillion yuan (that is, the total business size of SMEs in general trade volume), up 40% year on year. According to data, the actual business scale of cross-border payment institutions in 2022 will be 345.1 billion yuan, up 73% year on year. This means that the overall market penetration rate is less than 10%, and the cross-border payment industry has huge market development space.
The cross-border payment transaction amount of Lakala in 2023 will reach 43.1 billion yuan, and the cumulative number of cross-border merchants served will exceed 70000, an increase of 108% over 2022. In terms of cross-border payment, in 2023, Lakala will add local currency settlement services in Africa, ASEAN and other countries and regions along the Belt and Road, and launch online remittance APP products for foreigners working in China.
Lu Shuai, the co-founder of PingPong, told the Associated Press of Finance and Economics that from January 1 to March 3 this year, the proportion of both PingPong foreign trade B2B collection and payment users and cross-border e-commerce collection users increased by 53 percentage points, and cross-border payment still has a high growth space. From a macro perspective, as one of the "troikas" driving economic growth, China's foreign trade industry has maintained a sustained growth, especially the cross-border e-commerce industry is still in a period of rapid growth.
The New World said that in recent years, with the development and penetration of overseas mobile payment, the company has carried out localization deployment in Latin America, the Middle East and Africa, Europe, Southeast Asia and other regions, and achieved rapid growth in overseas business. At the same time, the company has gradually realized the integrated solution of commercial digital technology services from hardware to software, and then to service platform.
Chen Keyan, Vice President of Airwallex China, said that in the context of economic globalization, China's cross-border trade is booming, bringing new opportunities to the cross-border payment industry. A more complex and diversified cross-border outbound business model is taking shape, which is the trend of the industry's development.
"In recent years, many third-party payment giants have chosen to go overseas, mainly focusing on the development potential of cross-border payment. On the one hand, the competition of domestic payment has already become the Red Sea, and the giants' pursuit of more profit growth points or further expansion in the business landscape will promote their motivation to enter cross-border payment. On the other hand, since last year, many countries have successively provided visa free facilities for Chinese citizens, as well as various kinds of convenience policies provided by China for overseas visitors, The development prospect of cross-border payment business driven by policy and market environment is gradually emerging. From the above perspective, it is "right time" for giants to choose to go to sea Su Xiaorui told the Associated Press of Finance and Economics.
Although cross-border finance is full of opportunities, it still faces great challenges in terms of technology and compliance.
As for the difficulties of domestic institutions in overseas payment at present, Zhou Ye believes that Chinese enterprises have the world's leading technology and operational capabilities, but their technical capabilities in payment and collection are not outstanding. It is necessary to strengthen the collection capabilities of banks and payment institutions around the world. At present, payment institutions also need to adapt to overseas regulatory compliance while improving the technical level.
Lu Shuai pointed out the complexity and length of cross-border payment process. At the same time, different enterprises need different cross-border payment services. In addition to collection, many other counterparties may be added, such as paying store commissions to e-commerce platforms, paying upstream factories, logistics providers, and advertisers.
At the same time, with the growth of customers, the platform needs to provide more services. Lu Shuai pointed out that in the past, customers were mainly engaged in Amazon, or even only Amazon America, but now they are not only engaged in e-commerce, but also in B2B services such as games and air travel.
Chen Keyan believes that only enterprises with localized payment capability, full technology stack R&D capability, one-stop payment platform and a strong global layout can effectively help Chinese enterprises to achieve large-scale success overseas.
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