The Impact of Third-Party Payment on Traditional Banking Industry in China
Abstract: The payment method is under transition making the world step into a digital and mobile oriented chapter. With the development of integration between internet technology and financial functions, China expects to have a large number of mobile payments from its citizens as a result of the population size. The growth and development of e-commerce and the rise of online shopping have contributed much to the development of third-party payments. Such payment is now widely used in different fields, like retail payment, oversea tax refund, and investment finance. The shift of transaction volume virtually brings a substantial impact to the business as well as the commercial banks operations. Both definition, features, and the growth of the third-party payments are elaborated in the thesis. The research has also analyzed the effects of the third-party fees on the business operations with an emphasis on the Chinese traditional banking system. In addition, third party payment regulations and the entry criteria for the financial activities are in comparison with EU and U.S. policies. The study further gives the trends and recommendations on the improvement of the institutional side to ensure there will be maturity in the third-party payments. Due to the current ease policy, third-party payment platform has a room to grow and play in blurry zone. Combining with the empirical evidences, the negative impact on traditional banking profitability could induce the improvement of regulations.
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