Third-party payment services in China are gaining momentum over bank-led payment services among users thanks to e-commerce growth and changes in government regulations, suggests a research report released last week by research firm Analysys International.
E-commerce growth actually is creating more opportunities for providers of both third-party and bank-led payment services, Zhang Meng, an analyst with China-based Analysys International, tells PaymentsSource.
Traditionally, bank-led payment services have enjoyed an edge over those offered by third parties because they supported additional functions such as funds transfers. However, the growth of e-commerce has meant that some functions that are not possible in bank-led payment services are working in the favor of third parties, she adds.
“For example, interbank transactions,” she says. “Third-party payment services do not restrict you from using only one bank or bankcard to make a payment, and (they) work across banks, which has resulted in higher traction for them.”
More consumers likely will use the services offered by third parties because such providers no longer are limited to payment functions, and they are developing value-added services to address activities where banks generally are weak, Meng notes.
Going forward, banks should do more to cooperate with third parties instead of compete with them, Meng says.
Third-party payment services also are benefiting from a changing regulatory environment. Whereas third-party payment services previously suffered from a lack of regulation, the government has now developed a number of policies designed to help them development.
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