How Network Paradigms Can Lead to New Payments Innovations
By Zeng Ziling
Fellow, Sichuan Association of FinTech, China
By considering the characteristics of different networks, the PayTech industry can learn what is required to become more efficient and productive. Below I will show the payments paradigm of the past; the paradigm behind most of today’s payment innovations; and the direction of future PayTech innovations, using value networks.
There are different types of value networks in payments.
Figure 1: Illustration of different network paradigms
Payment Platforms
As a same-side network, a platform is the most common paradigm in the world of the Internet. With a platform, all users enjoy economies of scale due to the network effect.1
Platforms are also the most common paradigm in retail payments. A platform connects payers and receivers through multiple channels, remotely or nearby. Examples are PayPal, Alipay and WeChat Pay, where users remit money to each other. One important issue for platform-type business models is the large scale of users required. One payment platform is not usually compatible with another, for both competition and regulatory reasons.
In a multi-sided platform (MSP)2 there are several distinct groups of users. Marketplace platforms like Amazon and Taobao include buyers, sellers, couriers and other service providers also playing roles on the ...
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