Recently, the central bank issued documents to urgently suspend virtual credit card products and offline face-to-face payment and other face-to-face payments, raising the question behind the reason that virtual payment damages the traditional interests of UnionPay. In fact, UnionPay, as the only bank card organization in China, is also the only transaction clearing supplier for RMB payment cards. It has enjoyed monopoly profit sharing since its establishment and even used administrative means to exclude competitors.
As a bank card organization, UnionPay should be a non-profit service organization, but as the sole transaction clearing supplier of RMB payment card, it has enjoyed monopoly profit sharing since its establishment. In addition to profitability, UnionPay not only collects money by collecting service fees in the card processing fee, but also participates in the acquiring market through its subsidiaries, and uses the monopoly position to compete with the bank for profit. After the rise of third-party payment institutions, UnionPay has used administrative means to force "receipt" and incorporate it into the UnionPay clearing system. In the competition with international bank card organizations such as VISA, UnionPay is under the protection of administrative power. Organizations such as VISA cannot issue cards independently in China, and the dual-currency cards issued in cooperation with UnionPay are subsequently cancelled by UnionPay. In 2012, the WTO ruled that China UnionPay monopoly bank card settlement constituted discrimination and violated the WTO principles.
As the sole transaction clearing supplier, the card processing fee is divided into so that UnionPay can collect money, and the net profit will increase 18 times in 5 years.
Founded in 2002, UnionPay has long been the only transaction clearing provider for RMB payment cards issued in China, and this monopoly guarantee allows UnionPay to collect money. According to the "China UnionPay Institutional Bank Card Interbank Trading Income Distribution Method" implemented in 2004, UnionPay charges the issuing bank a network service fee of 0.6 yuan for ATM cross-bank withdrawal. For POS interbank transactions, UnionPay trades according to the merchant category. The amount is charged at 0.1% or 0.2%. According to the UnionPay public data, from 2002 to 2012, the cross-bank transaction volume of China’s bank cards increased by 120 times. Although UnionPay did not disclose financial data, it was related to the media such as Economic Observer and China Business News. It is reported that in 2012, UnionPay achieved operating income of 10.85 billion yuan and net profit of 1.836 billion yuan. Compared with the net profit of 0.98 billion yuan in 2007, the net profit in the five years increased by more than 18 times.
UnionPay is an industry association, but it is also involved in the offline acquiring market, using monopoly status to seize the market and compete with banks.
UnionPay as a bank card organization, but unlike VISA, MasterCard and other international card organizations do not participate in the receipt and payment business, this is the industry association's UnionPay must also target the profit, intervene in the offline acquiring market, and directly compete with the bank to swipe the card. 20% of the receipt profit in the handling fee. As a wholly-owned subsidiary of China UnionPay, UnionPay Business is mainly responsible for POS machine deployment and acquiring business. In the acquiring market, there are UnionPay's direct POS and bank-operated inter-connected POS, but the former can seize the market by virtue of the monopoly position of UnionPay. In 2008, UnionPay unilaterally forced Shenzhen commercial banks to transform the POS POS into direct POS, and also required to pay POS monthly fee to UnionPay. This means that the POS machine receipts in Shenzhen have become the only ones in UnionPay. After the promotion of direct-linked POS, before the rise of third-party payment, the number of direct-linked POS terminals of UnionPay Business once accounted for 60% of the national total.
In order to maintain the monopoly interests, it is mandatory to “accompile†third-party payment institutions and require them to access the UnionPay clearing system.
In August 2013, Alipay issued a message: “For some well-known reasons, Alipay will stop all offline POS business.†This is considered to be a protest against UnionPay’s announcement to “block†online payment companies. After the rise of third-party payment services such as Alipay, which is free of UnionPay, its online payment does not follow the UnionPay channel, and the offline acquiring business is also directly connected with the bank. The existing profit model of UnionPay has been affected. In July 2013, UnionPay issued a “Proposal†to prepare for the collection of online and offline third-party payment institutions, requiring all member banks to fully complete the migration of non-financial institutions' offline UnionPay card transactions before the end of 2013. UnionPay will transfer to the UnionPay card transaction of non-financial institutions in the first half of 2014, and believe that “the acquiring institution has not passed the China UnionPay to carry out the UnionPay card interbank transaction and fund clearing business, and should pay the China UnionPay for violation of regulations. Transfer of the penalty for the UnionPay card."
UnionPay has a self-determined income distribution mechanism and even imposes additional fees such as inter-bank enquiry fees and brand service fees.
In addition to the distribution mechanism of the "Interbank Trading Income Distribution Method" itself is not the result of market competition, but is formulated by UnionPay, UnionPay also imposes other additional fee notifications as the industry standard setter. For example, in the “Revenue Distribution Measures†approved in 2004, it was stated that the inter-bank inquiry fee was not charged for the time being. However, in October 2005, China UnionPay issued the “Regulations on collecting brand service fees, cross-border inter-bank inquiry transactions and adjustments†to member banks. The letter of cross-border cash withdrawal transaction fee standard is scheduled to be charged on January 1, 2006, and the consumer ATM machine cross-line inquiry fee will be charged. Although under the pressure of public opinion, UnionPay immediately clarified that it will not be collected for the time being, but since May 2006, the four major banks have announced the implementation of the regulations, charging a domestic inter-bank inquiry fee of 0.30 yuan / pen, this controversial charge continues one It was only stopped after the year. However, UnionPay's unique "brand service fee" is still being collected. The reason is that UnionPay card is a "brand" cultivated by UnionPay, and it should be charged to the issuer.
UnionPay uses administrative power to restrict market access, excludes overseas bank card organizations, and requires the cancellation of dual-currency cards with VISA and other marks.
As the only bank card organization in the Chinese market, UnionPay completely controls the RMB transaction payment clearing system, making it impossible for other international bank card institutions to issue independent RMB cards in China. Although VISA and MasterCard have issued “Double Currency Cards†with Chinese characteristics through cooperation with UnionPay, in 2006, in order to curb the rapid development of dual-currency cards, UnionPay filed an application with the People's Bank of China and the China Banking Regulatory Commission to request the UnionPay BIN standard. Raise to national standards and cancel the dual currency card. At the same time, China UnionPay participated in the online transaction settlement system of VISA and MasterCard because of the Olympic dual-currency cards issued by small and medium-sized banks such as Minsheng Bank and China Merchants Bank, thus refusing to enter the UnionPay network for settlement, eventually resulting in a number of 100 million hangs on VISA. And MasterCard's BIN number dual currency card has lost its domestic cross-bank payment function and has to withdraw from the market.
In 2012, the WTO ruled that China UnionPay monopoly bank card settlement constitutes discrimination and violates WTO principles.
In September 2010, the United States filed a consultation request under the WTO dispute mechanism, saying that the People's Bank of China has issued a number of restrictions since 2001, so that RMB payment card transactions are monopolized by China UnionPay, and other companies cannot enter. Violation of China's commitment to open the financial services industry market. In July 2012, the WTO Dispute Settlement Subcommittee issued a ruling stating that China’s designated state-owned China UnionPay’s monopoly practice for certain transactions has already constituted discrimination against foreign bank card suppliers. The WTO expert group believes that China requires all domestically issued payment cards to use China UnionPay network with its logo and force all service terminals in China to use China UnionPay network. This practice is inconsistent with the General Agreement on Trade in Services. China has created Conducive to the competition conditions of UnionPay, did not give other electronic payment providers national treatment, in violation of the original commitment.
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