Behind the Deactivation of WeChat Pay in Several Universities

When mobile payment became more and more popular, people had been accustomed to using WeChat, Alipay, etc., but the news that "many colleges and universities will stop WeChat Pay from next month" suddenly made a hot search and dominated the list for two days

When mobile payment became more and more popular, people had been accustomed to using WeChat, Alipay, etc., but the news that "many colleges and universities will stop WeChat Pay from next month" suddenly made a hot search and dominated the list for two days. Many netizens expressed doubts about why universities should stop WeChat Pay?

Recently, many universities across the country announced that WeChat Pay will be suspended from July 1, because WeChat will adjust the rate in the campus scene from July 1. Tencent has publicly responded several times, stating that this adjustment does not involve non-profit scenarios such as tuition and miscellaneous fees. For campus profit scenarios, including some e-commerce, alcohol and tourism, the planned rate adjustment is 0.2%, not the 0.6% posted online.

According to incomplete statistics, at least 10 universities have announced to stop WeChat Pay on official channels. In the inquiry of China Newsweek, some universities have indeed stopped WeChat Pay since July 1.

Judging from the number of colleges and universities that have been suspended and the influence of public opinion, it seems that "WeChat Pay suspension" is not an accidental choice for colleges and universities. This reflects the cost dilemma and management difficulties brought about by the rapid development of mobile payments in China. In the WeChat announcement, profit and non-profit scenes became a standard for this adjustment, but WeChat also acknowledged that the division of campus profit scenes was not fully considered and publicly apologized.

According to third-party data, as early as the end of 2016, the combined market share of Alipay and WeChat Pay (Tenpay) exceeded 90% for the first time. Industry insiders analyze that in a relatively mature market, from a commercial perspective, mobile payment enterprises have grown to a stage of profitability; From the perspective of social responsibility, the public welfare of campus channels is obvious. Therefore, it is necessary to be more cautious about where to charge, how to charge, and how much to charge.

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In July, some colleges and universities stopped WeChat Pay

"You can't use WeChat Pay in the last week, but you can use Alipay to pay", a canteen staff of Nanjing University of Science and Technology told China Newsweek that at present, many students come to dinner to use WeChat Pay, but they have stopped. When it comes to when it will be possible to recover, the staff hesitated and said that they had previously asked the finance department, but the specific time is still uncertain.

On June 26, Nanjing University of Science and Technology released the Notice on Closing WeChat Pay and Opening Alipay on Campus Card on its official website. It announced that WeChat Pay will start charging service fees on July 1, 2023 after receiving the notice from WeChat. In order to reduce unnecessary financial expenses, the service of campus card WeChat recharge and consumption will be stopped on June 30, and Alipay recharge and consumption services will be officially launched on that day.

After the announcement of Nanjing University of Science and Technology, many colleges and universities successively issued the announcement to stop WeChat Pay.

"In order to safeguard the interests of teachers and students, WeChat scanning code payment service will be suspended for all in school card users from June 30. All in one card campus cards, Bank of Communications APP, Cloud Flash Pay, Alipay and other channels will be used normally. I hope all teachers and students will know". On June 27th, Northwestern University also released a more detailed announcement on its official website. The announcement was titled "Notice on Suspending the Use of WeChat Scan Code Payment", and the announcement content showed that Tencent WeChat Pay had carried out segmentation management on campus scene users since July 1. Except for tuition fees, other charges would be limited and 0.6% of the handling fee would be charged (later, WeChat explained that the rate would be adjusted to 0.2%).

According to incomplete statistics, more than ten universities, including Nanjing University of Science and Technology, Northwest University, Jiangsu Normal University, Southwest University of Science and Technology, Zhoukou Normal University, Zhengzhou University of Light Industry and Shanxi Normal University, have issued similar announcements.

Zhoukou Normal University mentioned that after receiving the notice from WeChat, the school did not achieve obvious results after multi party communication, and mentioned that the specific WeChat Pay scenario would be disabled, such as various fees charged by the Finance Department, campus all-in-one card recharge, textbook fees, network fees for teaching staff living quarters, etc. In addition, it also gave an alternative way, and the Life Finance Department could choose bank card, Alipay, and cloud flash payment, Alipay can be used to recharge campus all-in-one card, pay textbook fees, pay network fees for staff living quarters, and pay electricity fees.

In fact, two days ago, after "many colleges and universities will stop WeChat Pay from next month" made a hot search, Tencent WeChat team made several responses and tried to solve relevant problems. WeChat apologized publicly, and said that since 2015, WeChat Pay has started to enter the campus. For non-profit payment scenarios (tuition and miscellaneous fees, life services, etc.) on campus, Zero-rating preferential policies have been given for a long time, and a large amount of costs have been continuously invested. However, "there is a lack of fine rate management. With the continuous increase of campus scenes and the number of merchants, a large number of profit scenes involving e-commerce, wine travel and other businesses occupy the subsidy resources of Zero-rating, resulting in increasing costs".

On social media, on the morning of July 1, many students announced that "today, WeChat Pay in school has been disabled", while others reported that "many merchants have disabled WeChat Pay". A senior student told China News Weekly that because his parents and himself chat on WeChat, they directly transfer money to living expenses on WeChat Pay, which is more convenient and often uses Alipay or campus card, but it is not as frequent as WeChat Pay payment.

Raising rates leads to controversy

In this university announcement, it is mentioned that in addition to tuition fees, WeChat will charge a handling fee of 0.6%. This rate seems to have become the focus of this public opinion storm.

At the beginning, WeChat Pay did not mention the specific rate in its response, but only said that this adjustment was only for a small number of profit-making scenarios such as e-commerce, wine and tourism to implement preferential rate policies that are lower than the market average, while campus non-profit scenarios continue to maintain Zero-rating.

In the third public response, WeChat said publicly that it would eventually implement refined management of the campus profit scene rate, and the plan was to adjust the rate to 0.2%, of which WeChat Pay actually charged 0.1%, and the other 0.1% was paid as a technical service fee to partners who provide services and technical support for the school. The 0.6% reported by the outside world was pure misinformation.

A practitioner in the payment field pointed out that any third-party payment institution has different prices across different channels. He particularly emphasized the particularity of campus channels, as most payment institutions usually offer a zero rate for tuition fees.

In March 2016, the National Development and Reform Commission and the People's Bank of China issued a notice on improving the pricing mechanism for bank card swiping fees, known as the "96 fee reform" in the industry, which is a significant reform in the payment industry. After this reform, hospitals, schools and charities are classified as relief, that is, public welfare transactions with zero rate. The reference rate for standard merchants including catering, entertainment, clothing, etc. is 0.6%, while the reference rate for discount merchants involving gas stations, supermarkets, air ticketing, water, electricity, gas, etc. is 0.38%.

The above people further analyzed that, in fact, in the campus scene of WeChat Pay, it is not just tuition fees, but also living expenses. It is not easy to say what the rate is for consumption scenarios such as campus supermarkets and campus life, but generally third-party payment institutions will provide certain preferential subsidies.

Yin Zhentao, deputy director of the Law and Finance Research Office of the Institute of Finance of the Chinese Academy of Social Sciences, told China Newsweek that the main body of the campus payment scene is students, and students' payment is generally non-commercial behavior, such as tuition and miscellaneous fees, which are non-profit expenses in principle; The other is the cost incurred by introducing supermarkets, convenience stores, etc. on campus through bidding, which has a certain degree of profitability; In addition, there are also expenses incurred by profit-making institutions such as alcohol and tourism that operate in the vicinity of the school, as well as those operated by non student customers.

In the campus payment scenario, WeChat Pay is based on social interaction and is mostly micro payment, so offline consumption may use WeChat more often. "In the distinction between for-profit and non-profit, it is easy to give for-profit institutions at a lower rate because of the participation of local promotion institutions", Yin Zhentao said, in this case, WeChat used to have Zero-rating for campus, and with the increase of for-profit institutions, costs will indeed increase, Therefore, what WeChat calls "profit scenes crowd out education subsidy resources with Zero-rating, resulting in increasing channel and operating costs".

A university teacher told China News Weekly that cloud flash payment is currently widely used on campus due to previous subsidies. The teacher pointed out that for students, WeChat and Alipay are still mainstream payment means, because they fit their life scenarios, but the payment means of other platforms are becoming more and more diverse, but there is really the problem of "how to prove and determine what kind of merchants can continue to pay zero rate".

Mobile payment monetization is a long journey

"Campus payment is a very important scenario, and the competition around this scenario has been carried out for many years, especially in the case of online saturation, offline payment channels are currently playing very intensely", Li Jin, chief financial technology consultant of Tsinghua University's Cross Information Core Technology Research Institute, pointed out that the entire third-party payment market has entered the stock market, basically a "duopoly" pattern of WeChat Pay and Alipay, But subsequent entrants such as bank mobile payment platforms and aggregate payment platforms are fighting on campus.

Li Jin further emphasized that students, as young people, have a high potential for future payment and a relatively large room for growth. On the one hand, it is to cultivate students' payment habits from the campus, and on the other hand, it integrates with other businesses of major internet companies, such as cloud business and education business, to enter the campus. Therefore, the campus is a "battleground for military strategists".

Zhang Yi, CEO of iMedia Consulting, pointed out that on the one hand, payment channels bear significant operating cost pressure, and on the other hand, there is also the possibility of making profits through mobile payments. Therefore, where to charge, how to charge, and how much to charge are indeed prone to controversy. Campus channels are actually a strategic business of payment platforms. On the one hand, campuses play an important role in society, and on the other hand, they are the carrier for payment brands to move towards society. Therefore, social responsibility and reputation evaluation are also crucial. "In a situation where all parties are eager to make big money, it may not be a suitable opportunity".

In fact, the development of third-party payment in China was also popularized within a decade. When the payment license was first issued in 2011, mobile payment quickly entered the growth stage from its initial stage. In the midst of savage growth, there was only the first reform in payment pricing in 2013. In 2016, there was a 96 fee reform, which reduced merchant fees.

After issuing more than 200 payment licenses, third-party payment institutions have gradually "left". According to public media reports, there are currently 191 licensed institutions, with 271 at their peak. According to relevant research reports, the transaction scale of the domestic third-party payment market is constantly growing, and it is expected to exceed 570 trillion yuan by 2026. However, under the increasingly strict industry regulatory policies and environment, there is a clear trend of gathering at the top.

"Raising the rate is the choice in line with the Internet business model", said Hu Qimu, the Principal investigator of Sinosteel Economic Research Institute. At the beginning, the rate was zero, and even subsidies were given. Later, the price was raised. From pursuing scale to pursuing profitability, this is a change in strategic objectives.

In the operating costs paid by third parties, banks and other institutions actually charge a certain channel fee, and there are also costs such as land promotion and maintenance. Zhang Yi stated that in this context, third-party payment measures the relationship between scale and fee rates, which is to deal with operational issues of growth and sustainability. Finding a better business model is challenging and challenging, and it is a long journey.

On October 13, 2021, the People's Bank of China issued the Notice of the People's Bank of China on Strengthening the Management of Payment Acceptance Terminals and Related Business (Yin Fa [2021] No. 259) on the official website of the People's Bank of China, requiring merchants, including small merchants, not to use WeChat or Alipay personal collection codes to collect money. Merchants need to apply for a special merchant payment code for payment.

The above-mentioned practitioners in the payment field stated that this clause is aimed at further clarifying ambiguous areas, such as whether the school's snack bar belongs to a zero rate merchant, and whether any merchant secretly enjoys subsidies through this loophole.

The relevant person in charge of the central bank stated that the "Notice" overall helps to better protect the legitimate rights and interests of consumers, and is conducive to preventing illegal elements from stealing consumer personal information through means such as transforming payment acceptance terminals and applying for false merchants.

The development of third-party mobile payments is rapid, but for many years there have been extensive management issues in merchant management, and now it is gradually moving towards refinement. This is not only due to costs, but also regulatory requirements, "emphasized the above practitioners.

Author: Meng Qian

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