The challenge of payment common code

According to the 2021 mobile payment consumer survey released by the Information Policy Council, it was found that the preference of consumers to prefer mobile payment has increased significantly, from 37% in 2020 to 50%, and the mobile payment usage in 2021 will approach 70% (69%) for the first time. , catching up with the first-ranked physical card (74%) and cash (71%), becoming the only one of the four major payment tools to grow continuously within three years, and the gap with the physical card shortened from 26% in 2019 to 5 in 2021 %, reflecting the fact that the epidemic has accelerated consumers' habit of using mobile payment. If the epidemic continues to affect, the popularity of mobile payment will have the opportunity to surpass cash.

When the mobile payment market is so huge, the industry wants to improve the inconvenience of mobile payment at this stage. Therefore, the QRcode common code was born, but can the common code be successfully implemented in the new era of payment? What is the current status of development? Are you facing difficulties and bottlenecks? Let's see what Mark has to say today!

1. What is the common code?

• Definition: In order to establish a convenient QR Code payment environment and strengthen QR Code payment security protection, formulate unified QR Code specifications and security control mechanisms, and provide integrated services across platforms and financial institutions, eliminating the need to interface with different payment providers. The inconvenience also saves financial institutions the cost of many-to-many system interface and construction, and achieves the industrial benefits of "inclusive finance".

Visa: Common QR Code Scanning Payment Service

• The common QR Code scanning payment service promoted by Visa is the first to provide another convenient payment channel for consumers who hold Visa financial cards; using the unified technical standard EMV QR Code, only one payment bill will be required in the future. The common QR Code can be applied to the scanning tools of different mobile phones. After binding the Visa debit card, consumers can use the card-issuing bank's Apps, the "Taiwan Mobile Payment" app, or the QR Code scanning tool on their smartphone to scan the common QR Code on the bill to pay the card fee. There is no need to go out to the supermarket, and even people abroad can use their mobile phones to pay card fees. Not only can they pay more than 20,000 yuan at one time, but they can also save unnecessary cross-bank withdrawal fees.
• Operators connected in series : VISA promotes the common QR Code standard EMVCo in the Taiwan market. At present, EMVCo has been connected in series including Taiwan Pay, Taishin Bank Card Deli, Wing Fung Bank Feng Wallet, Standard Chartered Bank Mobile Banking, Hua Nan Bank Mobile Network, Mega Bank Zhao Top 10 wallets including Feng Pay, Chang Bank Mobile Net Changyin Wallet, First Bank e Action, Cooperative Treasury Heku E Pay and Taiwan Enterprise Bank Mobile Bank Mobile Payment.

Financial company: Taiwan QR Code common payment standard

• In response to the rise of mobile payment in various countries, under the policy of the Ministry of Finance, various financial institutions cooperated with Caijin Information Co., Ltd., using the existing inter-bank financial information system of Caijin, to formulate the "Taiwan Pay QR Code Common Payment Standard", and jointly create a common Create a prosperous and co-prosperous payment ecosystem, create a full range of cash flow services, and allow "general people" and "micro-merchants" to share inclusive financial services.
• In order to improve the payment efficiency of the public and avoid the trouble of system connection cost or account reconciliation caused by having to sign contracts with different payment providers, Caijin Co. Various QR codes used by banks, e-payments and third-party payment providers have been integrated into a common QR Code. That is to say, the store only needs to post a TW QR code, and the public only needs to open an App to scan all over Taiwan.
• The goal is to formulate a common payment standard for QR Code, and each payment tool on the market has its own set of specifications, which can solve the problems of many-to-many serial connection of merchants and people downloading a bunch of apps, whether it is the "own wallet" developed by the payment industry or adding " "Shared wallet" can join the "common payment standard" and service network, so that ordinary people and stores can use mobile payment with a lower threshold.

The "QR Code Common Payment Standard" can provide convenient services such as transfer, bill payment, tax payment and shopping. In 2018, international card organizations such as Visa and Mastercard are optimistic about the application development trend of mobile payment in Taiwan, and successively announced the introduction of the international EMV QR Code specification. At the end of the same year, the "Taiwan Pay QR Code Common Payment Standard" was integrated with the EMV QR Code specification, and the "QR Code Common Payment Five-in-One" was pioneered, and the five-in-one (Taiwan Pay, Visa, Mastercard, JCB, UnionPay card) QR Code, as long as the special store posts one QR Code, it can accept 5 kinds of payment instruments at the same time.

2. The purpose/advantage/why of the common code?

Current usage of QR Code

Advantage
QR Code scanning payment is favored by consumers due to its low cost of construction, convenient access to more small merchants, unlimited smartphone models and multiple functions, and its usage rate is as high as 87.5%.

1. Payment in one piece of paper: Currently, small and medium-sized stores only need to post a QR Code of about A5 size for consumers to scan the code through various mobile payment apps to make payments.

2. No mobile phone brand restrictions: Smart mobile devices that generally use NFC inductive payment such as Apple Pay, etc., and such smart mobile devices are often expensive, and it is difficult to expand the use of inductive payment. QR Code payment. One-dimensional barcode or two-dimensional barcode, anyone with internet access and built-in camera lens can make payment, the threshold is relatively low, and it is more suitable for promotion to the general public.

3. No field and restrictions on card swiping machines: In the past, the card swiping machines that supported contactless payment were not only a huge cost for the acquirer, so that banks currently only provide this type of card swiping machines in important or chain channels. In addition, , install the communication lines required for the space configuration of the credit card machine to facilitate the transmission of transaction information. However, the transaction type of QR Code allows stores to post barcodes in various narrow business spaces such as markets and night markets. With the current network, the store can reconcile or confirm the transaction information.

Disadvantages <br class="smart">Each payment provider has a different QR Code, and you must bind a different credit card to enjoy exclusive offers. Not only does the store's display of payment signs occupy a large area of the booth or the table of the cashier, but it also often causes inconvenience and confusion for consumers.

Merchant

1. Small space for placement: just post QR Code to receive payment.

2. Good collection mechanism: Consumers operate mobile payment by themselves, and merchants only need to install the collection APP on the smart phone/tablet to know the transaction collection status.

3. Reduce the risk of cash storage and receiving counterfeit banknotes: reduce the cost of accepting and keeping cash coins and the risk of receiving counterfeit banknotes, and expand the transaction amount.

user

1. Increase the number of users and the wide customer base: including mobile online banking APP and Taiwan mobile payment APP, users can pay with QR Code.

2. Good customer experience: Compatible with iOS and Android systems, and no need to replace any hardware, customers can scan the same QR Code to pay with any wallet, greatly improving the satisfaction of consumer experience, replacing the current chip financial card network The pain point of trading.

Financial institution

1. Low cost of deployment: It can be applied to both online and physical stores, and there is no need to deploy a physical credit card machine and bear the maintenance cost.

2. Wide range of application: not limited to the cardholder's mobile phone operating system and does not need to have NFC function.

3. Low handling fee rate: Because the acquiring bank is free of investment in hardware equipment, it can provide lower handling fees, which will help improve the store's willingness.

3. Current development status (bottlenecks, difficulties, challenges)

electronic payment market

penetration rate
In 2021, a total of 28 electronic payment institutions will open for business in Taiwan, and the total amount of the three core businesses of transaction, transfer and stored value will reach NT$312.45 billion, an annual increase of 92.3%. Among them, the transaction amount increased by 49.8% year-on-year to 87.74 billion; the transfer amount increased by 131.5% year-on-year to 61.86 billion, which was the most significant growth among the three major businesses; as for the stored value amount, it increased by 110.8% year-on-year to 162.85 billion. In terms of the number of users, the cumulative number of users of electricity branch offices in 2021 exceeded 15 million in one fell swoop, an annual increase of 34.2%.

Electronic Payment Brands Frequently Used by Consumers <br class="smart">According to the statistics of the Institute of Industrial Intelligence (MIC) of the Information Policy Council, the top 5 electronic payment brands frequently used by consumers in Taiwan are "LINE Pay", " Street Pay", "Apple Pay", "Google Pay" and "Taiwan Pay". Among them, LINE Pay, Jiekou Payment and Taiwan Pay need to use QR Code scanning for payment. Although the Finance Division and the United Credit Card Center have added support for domestic and foreign common credit card scanning payment specifications, Taiwan Pay can also accept financial cards, Visa, MasterCard, JCB, UnionPay and other brands, but LINE Pay and Jiekou Payment, which have a large market share in payment, have not yet joined.

Are Common Codes Pros or Cons?

The position of the payment industry <br class="smart">Senior analyst of the Sankei Database of the Taiwan Economic Research Institute said that the 5G Internet of Things era is coming, and the integration into a unified code scanning specification is the future trend; however, for payment industry, they do not want to Share existing user groups and user information with other operators. In addition, it is only necessary to integrate laws and regulations such as electronic payment and electronic ticket business, including the processing of cash flow, so that funds can be transferred between different electronic payment accounts. The liquidation mechanism, etc., are all quite big projects and challenges.

Visa, an international credit card organization, also stated that the collection and processing of information flow cannot be done by a certain bank or payment industry, but must be handed over to the joint collection center of the two major domestic actuarial institutions to cooperate with the financial company, but there will also be involved behind this. Problems such as cost distribution and related handling charges incurred when linking to a credit card after scanning the QR code.

Bankers ' Position <br class="smart">Experts further analyzed that the biggest impact on banks is the part of cash flow. In the past, each company had its own QR Code, and the linked account or credit card was also its own. However, if the specifications are unified in the future, how to make funds transfer between different electricity accounts, the problem of debiting between banks will be a big key. . At the same time, the related costs incurred by scanning codes in the past were absorbed by each bank or industry itself. Experts believe that in the future, after code scanning is integrated into a unified specification, the above-mentioned processing and diversion will cause related costs and other issues. Banks or operators may charge the store instead. , I am afraid it will make it more difficult for the store to pay.

Bottleneck: Why has the electronic payment market penetration rate not been able to be promoted smoothly in recent years?
The e-payment trading market presents the three major players of Jiekou Payment, All-in-One Card, and Yushan Bank, with a combined market share of 82.6%. The winner in 2021 is Jiekou Payment, which has won the title for many years, with an annual increase of 36.2% in transaction amount; the second is the one-card MONEY (formerly LINE Pay money), with an annual increase of 64.5% in transaction amount; the third is concurrent Yushan Bank, which operates electricity and payment services, has an annual increase of 11.1% in transaction value, far ahead of other financial institutions that also operate electricity and payment services.

It is not easy for the whole of Taiwan to achieve "cross-platform channel sharing". At this stage, there are many problems such as fee sharing, system and responsibility ownership between large and small merchants signed by various payment institutions, and there is no good solution. Frequently used electronic payment providers have not joined the layout of the common code. If they want to follow up the function of "consumption payment", they still need the joint efforts of the whole environment and the supporting measures of the relevant competent authorities, so that the existence of the common code can make Merchants, financial institutions and consumers achieve a win-win situation.

4. Future trends

Mobile payment market future goals

In the first wave of common QR Code scanning payment, 22 card issuers have agreed to add QR Code payment for credit card bills; 16 card issuers with Visa financial cards will provide QR Code scanning tools in Apps to bind Visa financial cards to users to use QR Code to scan the code to pay. Based on the scale of 19 participating credit card issuing banks and about 37 million cards in circulation, it is estimated that nearly 90% of domestic credit card holders can use this service, including not only consumers, merchants, financial institutions, etc. It can also help the government achieve the goal of 90% mobile payment penetration by 2025.

The competent authority has not yet formulated relevant regulations

Since the Ministry of Finance and relevant competent authorities have not yet formulated a common standard for QR Code, Caijin Company stated that the current EMV international universal scanning code in cooperation with credit card organizations is to improve the experience and convenience of consumers, and will follow up in the future. Bankers approached, hoping to gradually integrate.

5. Mark’s thoughts

The common code is actually one of the required links in the construction of the "inter-agency sharing platform for electronic payment". It is divided into two stages. The first stage is mainly based on transfer. The stage includes multiple mechanisms such as shopping, payment, and tax payment. E-commerce operators who join the same mechanism will be able to share each other's channels and even exchange information.

In the first stage, as long as the electricity branch operator must join the mutual transfer function, it is not mandatory in the second stage, especially for consumer payment. Help, information flow and financial flow are also more complicated, so if there is no mandatory regulation, the second stage should not achieve the desired effect.

The more likely development is that in the future, Taiwan's electricity supply market will become mature and saturated, and the relevant industry will be more willing to integrate to seek breakthroughs. Now there are new electricity branches to join the operation, so the development of the common code will be in the short term. Pretty limited.