Those who violate the rules will probably not make a profit in this rate adjustment, but will increase the cost because of the rate adjustment. They are likely to turn to online payments.
More than ten days ago, Dong Hao and his friends found a supermarket in a restaurant in the Wudaokou area of ​​Beijing.
"I was joking at the time, you see, we have a meal in the supermarket. This situation is a typical set of code behavior." Dong Wei told reporters.
Dong Wei has been studying the bank card industry for many years and is currently the editor-in-chief of my love card network. He told reporters that each merchant that installed a POS machine has an MCC code. The MCC code is set by the acquiring institution for the special merchant to indicate the UnionPay card trading environment, the merchant's main business and industry attributes. Different MCC codes represent different industries. In the previous rate system, the commission rates generated by different industries are different. For example, the rate of restaurant-type merchants is 1.25%, the rate of general-purpose merchants such as department stores is 0.78%, and the rate of merchants of people's livelihoods such as supermarkets is 0.38%.
"In the case of such gradient charges, some merchants will apply the MCC code of the lower rate merchants in order to pay less fees, and this behavior is called the sleeve code in the industry." Dong Wei said, however, from this year From September 6th, the set code will no longer make sense.
The background of Dong’s judgment is that the Notice of the National Development and Reform Commission and the People’s Bank of China jointly issued the “Notice on Improving the Pricing Mechanism for Bank Card Credit Card Fees†(hereinafter referred to as the “Noticeâ€), the card issuer’s service fee collected by the card issuer. Government pricing will be implemented by different current business categories, and the same rates will be applied to debit cards (ie, savings cards) and credit cards (ie credit cards), instead of distinguishing between merchant categories, government guidance prices, cap management, and borrowing. Card and credit card differential billing. The Notice will be implemented as of September 6, 2016.
According to the Notice, when the consumer uses the bank card to pay, the merchant needs to pay the handling fee divided into three parts, namely, the issuing bank service fee, the acquiring service fee, and the network service fee. Collected by the issuing bank, the acquiring institution and the network service agency.
"Commonly speaking, which company is the POS machine you use to swipe your card, which company is the acquiring institution, the acquiring institution can be a bank or a third-party payment company; and which bank card do you use? Bank, which bank is the issuing bank; network service fee is paid to UnionPay, UnionPay belongs to the clearing house." Dong Wei said.
The "Notice" stipulates that the service fee rate of the issuing bank shall not exceed 0.35% of the transaction amount, the credit card transaction shall not exceed 0.45%, and the network service fee shall not exceed 0.065% of the transaction amount; The market adjustment price is implemented, and the acquirer negotiates with the merchant and collects it from the merchant.
This means that if the user is using a debit card, the rate is 0.415% + the billing fee. If the user is using a credit card, the rate is 0.515% + the billing fee.
“After this adjustment, regular catering merchants and general merchandise merchants and other general merchants have lower credit card rates.†Dong Wei said that the reason why regular catering merchants and general merchants benefit is because regular merchants originally The rate of payment was high, and after the fee was changed, the rate was lowered.
"But many of these two types of merchants have set the yards to reduce the handling fee." Dong Wei revealed.
UnionPay has repeatedly imposed penalties on acquirers for the problem of set-ups. UnionPay statistics found that in 2014, the number of non-standard merchants was as high as 1.6 million, including irregularities such as package or special billing. In the first half of 2014 alone, more than 180,000 merchants were found to have violated the “sets of codesâ€, accounting for 40% of all illegal merchants. The phenomenon of set-up is more prominent in the catering service industry.
"While those who violate the rules, it is likely that they will not make a profit in this rate adjustment. Instead, they will increase the cost because of the rate adjustment. They are likely to turn to online payment," Dong said.
Dong Wei gave the reporter an example. Suppose a catering company reduced the rate from 1.25% to 0.38% through the set of codes, but in fact the rate he paid was not only 0.38%, because the merchants had to give it a set. The billing agency of the code service pays the corresponding fee, and the actual paid rate may be around 0.6% or even higher.
“Under the original rate system, even if the actual payment is 0.6%, the merchants take up a lot of money. However, after the rate reform, the cost of the debit card is reduced to 0.415% + the cost of the receipt, which may end up at around 0.5%. The debit card fee may be around 0.6% overall, so the fees for the merchants who violate the rules package are higher than the statutory ones." Dong Wei analyzed.
Third-party payment agencies need to rely on services. A third-party payment agency staff member who does not want to be named tells reporters that third-party payment agencies help merchants to set codes, which is a common phenomenon, and the reason for doing so is to seize the market.
"Under the original rate system, the issuing bank, the acquiring bank and UnionPay will divide the credit card processing fee according to the ratio of 7:2:1. The acquiring institution is very competitive in order to obtain the 20% fee income. Especially third-party payment institutions." Dong Wei revealed.
According to the aforementioned third-party payment agency staff who do not want to be named, sometimes for the promotion, they will give the merchant pos machine for free, just for the merchant to use.
"But due to the problem of handling fees, many merchants were still unwilling to use them. We will help them to set the code. For example, directly make a false business information, including business licenses and merchants' access materials, and directly disguise high-rate merchants. A low-rate merchant." The third-party payment agency staff said that with the intensification of competition, many third-party payment companies are free, all in the set, after the new rules come out, the way to capture the market has been No longer works.
In Dong Wei’s view, the impact of the new rules on bank card rates on third-party payments is that the means of competition needs to change, and in the future, services must be used to win customers.
An agent paid by the third-party payment institution box told the rule of law weekend reporter that the competitiveness of the traditional old POS machine has been weakened. At present, the box payment is launching an intelligent POS machine with built-in functions such as WeChat payment and Alipay payment. It can not only pay offline such as credit card, but also be compatible with online payment.
There are still advantages in online payment such as Alipay. How will this credit card rate reform affect the Alipay and WeChat payments that are increasingly used?
Taking Alipay as an example, according to Dong Wei, when merchants access Alipay, they only need to pay a certain rate to Alipay. Even if the consumer's Alipay is bound to a bank card, the merchant does not need to pay any fees to the issuing bank.
Alipay announced in November 2015 that in order to support “Popular Innovation, Entrepreneurial Entrepreneurshipâ€, the rate of small and micro merchants in the relevant industries will be lowered, except for some special industries (such as lottery, games, 3C digital, etc.). The merchant's handling fee through Alipay is reduced to a minimum of 0.6%.
According to public information, the rate of WeChat payment is also around 0.6%.
This rate is very low compared to the credit card rates of the catering and department store merchants at that time.
In this context, coupled with the increasing popularity of mobile payments, many merchants have access to Alipay and WeChat payments, even in offline shopping, the market share of the card market is also squeezed.
However, after the introduction of the new regulations, the rates for online and offline payments are very close. From the perspective of open rates, the advantages of Alipay or WeChat payment are greatly weakened.
The reporter also asked the relevant person in charge of Alipay about Alipay's views on the new rules for credit card rates, but the other party said that it was inconvenient to reply.
However, Dong Wei told reporters that from the object of the "Notice", the new rules are only for offline payment of credit card, and do not directly restrict online payment such as Alipay. The payment scenarios of the two types of payment methods, such as credit card and Alipay or WeChat payment, are different. The card does not need to be connected to the Internet, but Alipay or WeChat payment must be connected to the Internet.
"As a result of the new regulations, those merchants who have previously violated the rules of the code may not accept credit card payment for a period of time due to the fee problem, but instead turn to Alipay and other online payments." Dong Wei said.
Bank of Communications International Securities also issued a report saying that even if the credit card rate declines, WeChat payment and Alipay still have an advantage. The reason is that although the WeChat payment and Alipay rates are 0.6%/pen, the actual price is about 0.2% to 0.4. %. WeChat payment and Alipay are still lower than bank card rates. They are more competitive in terms of merchants. At the same time, due to the popularity of smartphones and the gradual development of users' mobile payment habits, they also have advantages in user acquisition.
More than ten days ago, Dong Hao and his friends found a supermarket in a restaurant in the Wudaokou area of ​​Beijing.
"I was joking at the time, you see, we have a meal in the supermarket. This situation is a typical set of code behavior." Dong Wei told reporters.
Dong Wei has been studying the bank card industry for many years and is currently the editor-in-chief of my love card network. He told reporters that each merchant that installed a POS machine has an MCC code. The MCC code is set by the acquiring institution for the special merchant to indicate the UnionPay card trading environment, the merchant's main business and industry attributes. Different MCC codes represent different industries. In the previous rate system, the commission rates generated by different industries are different. For example, the rate of restaurant-type merchants is 1.25%, the rate of general-purpose merchants such as department stores is 0.78%, and the rate of merchants of people's livelihoods such as supermarkets is 0.38%.
"In the case of such gradient charges, some merchants will apply the MCC code of the lower rate merchants in order to pay less fees, and this behavior is called the sleeve code in the industry." Dong Wei said, however, from this year From September 6th, the set code will no longer make sense.
The background of Dong’s judgment is that the Notice of the National Development and Reform Commission and the People’s Bank of China jointly issued the “Notice on Improving the Pricing Mechanism for Bank Card Credit Card Fees†(hereinafter referred to as the “Noticeâ€), the card issuer’s service fee collected by the card issuer. Government pricing will be implemented by different current business categories, and the same rates will be applied to debit cards (ie, savings cards) and credit cards (ie credit cards), instead of distinguishing between merchant categories, government guidance prices, cap management, and borrowing. Card and credit card differential billing. The Notice will be implemented as of September 6, 2016.
According to the Notice, when the consumer uses the bank card to pay, the merchant needs to pay the handling fee divided into three parts, namely, the issuing bank service fee, the acquiring service fee, and the network service fee. Collected by the issuing bank, the acquiring institution and the network service agency.
"Commonly speaking, which company is the POS machine you use to swipe your card, which company is the acquiring institution, the acquiring institution can be a bank or a third-party payment company; and which bank card do you use? Bank, which bank is the issuing bank; network service fee is paid to UnionPay, UnionPay belongs to the clearing house." Dong Wei said.
The "Notice" stipulates that the service fee rate of the issuing bank shall not exceed 0.35% of the transaction amount, the credit card transaction shall not exceed 0.45%, and the network service fee shall not exceed 0.065% of the transaction amount; The market adjustment price is implemented, and the acquirer negotiates with the merchant and collects it from the merchant.
This means that if the user is using a debit card, the rate is 0.415% + the billing fee. If the user is using a credit card, the rate is 0.515% + the billing fee.
“After this adjustment, regular catering merchants and general merchandise merchants and other general merchants have lower credit card rates.†Dong Wei said that the reason why regular catering merchants and general merchants benefit is because regular merchants originally The rate of payment was high, and after the fee was changed, the rate was lowered.
"But many of these two types of merchants have set the yards to reduce the handling fee." Dong Wei revealed.
UnionPay has repeatedly imposed penalties on acquirers for the problem of set-ups. UnionPay statistics found that in 2014, the number of non-standard merchants was as high as 1.6 million, including irregularities such as package or special billing. In the first half of 2014 alone, more than 180,000 merchants were found to have violated the “sets of codesâ€, accounting for 40% of all illegal merchants. The phenomenon of set-up is more prominent in the catering service industry.
"While those who violate the rules, it is likely that they will not make a profit in this rate adjustment. Instead, they will increase the cost because of the rate adjustment. They are likely to turn to online payment," Dong said.
Dong Wei gave the reporter an example. Suppose a catering company reduced the rate from 1.25% to 0.38% through the set of codes, but in fact the rate he paid was not only 0.38%, because the merchants had to give it a set. The billing agency of the code service pays the corresponding fee, and the actual paid rate may be around 0.6% or even higher.
“Under the original rate system, even if the actual payment is 0.6%, the merchants take up a lot of money. However, after the rate reform, the cost of the debit card is reduced to 0.415% + the cost of the receipt, which may end up at around 0.5%. The debit card fee may be around 0.6% overall, so the fees for the merchants who violate the rules package are higher than the statutory ones." Dong Wei analyzed.
Third-party payment agencies need to rely on services. A third-party payment agency staff member who does not want to be named tells reporters that third-party payment agencies help merchants to set codes, which is a common phenomenon, and the reason for doing so is to seize the market.
"Under the original rate system, the issuing bank, the acquiring bank and UnionPay will divide the credit card processing fee according to the ratio of 7:2:1. The acquiring institution is very competitive in order to obtain the 20% fee income. Especially third-party payment institutions." Dong Wei revealed.
According to the aforementioned third-party payment agency staff who do not want to be named, sometimes for the promotion, they will give the merchant pos machine for free, just for the merchant to use.
"But due to the problem of handling fees, many merchants were still unwilling to use them. We will help them to set the code. For example, directly make a false business information, including business licenses and merchants' access materials, and directly disguise high-rate merchants. A low-rate merchant." The third-party payment agency staff said that with the intensification of competition, many third-party payment companies are free, all in the set, after the new rules come out, the way to capture the market has been No longer works.
In Dong Wei’s view, the impact of the new rules on bank card rates on third-party payments is that the means of competition needs to change, and in the future, services must be used to win customers.
An agent paid by the third-party payment institution box told the rule of law weekend reporter that the competitiveness of the traditional old POS machine has been weakened. At present, the box payment is launching an intelligent POS machine with built-in functions such as WeChat payment and Alipay payment. It can not only pay offline such as credit card, but also be compatible with online payment.
There are still advantages in online payment such as Alipay. How will this credit card rate reform affect the Alipay and WeChat payments that are increasingly used?
Taking Alipay as an example, according to Dong Wei, when merchants access Alipay, they only need to pay a certain rate to Alipay. Even if the consumer's Alipay is bound to a bank card, the merchant does not need to pay any fees to the issuing bank.
Alipay announced in November 2015 that in order to support “Popular Innovation, Entrepreneurial Entrepreneurshipâ€, the rate of small and micro merchants in the relevant industries will be lowered, except for some special industries (such as lottery, games, 3C digital, etc.). The merchant's handling fee through Alipay is reduced to a minimum of 0.6%.
According to public information, the rate of WeChat payment is also around 0.6%.
This rate is very low compared to the credit card rates of the catering and department store merchants at that time.
In this context, coupled with the increasing popularity of mobile payments, many merchants have access to Alipay and WeChat payments, even in offline shopping, the market share of the card market is also squeezed.
However, after the introduction of the new regulations, the rates for online and offline payments are very close. From the perspective of open rates, the advantages of Alipay or WeChat payment are greatly weakened.
The reporter also asked the relevant person in charge of Alipay about Alipay's views on the new rules for credit card rates, but the other party said that it was inconvenient to reply.
However, Dong Wei told reporters that from the object of the "Notice", the new rules are only for offline payment of credit card, and do not directly restrict online payment such as Alipay. The payment scenarios of the two types of payment methods, such as credit card and Alipay or WeChat payment, are different. The card does not need to be connected to the Internet, but Alipay or WeChat payment must be connected to the Internet.
"As a result of the new regulations, those merchants who have previously violated the rules of the code may not accept credit card payment for a period of time due to the fee problem, but instead turn to Alipay and other online payments." Dong Wei said.
Bank of Communications International Securities also issued a report saying that even if the credit card rate declines, WeChat payment and Alipay still have an advantage. The reason is that although the WeChat payment and Alipay rates are 0.6%/pen, the actual price is about 0.2% to 0.4. %. WeChat payment and Alipay are still lower than bank card rates. They are more competitive in terms of merchants. At the same time, due to the popularity of smartphones and the gradual development of users' mobile payment habits, they also have advantages in user acquisition.
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