How to cut the cutting machine? How many sneak peeks have been developed by the mind-set acquirer to grab the market and “cope” the regulation? What kind of industry background has brought about the status quo of "reasonable chaos"? Who is laughing and crying in this mixed game?

Have you ever played "stealing food"? One of the big secrets is probably the danger of taking people. When Others happen to be inconvenient in meetings, trips, etc., it is often easier to get started, so as to steal the share of others to feed themselves.

Judging from the industry complaints that the “First Financial Daily” reporter learned, the payment and receipt industry has been playing “stealing food” in recent months. Although this phenomenon has existed in the past, the industry believes that it has been "white-hot" in the near future, and the incentive is that there are 8 institutions in the "inconvenient" period. Since April 1 this year, the institutions that have been engaged in the acquiring business by 8 third-party payment, such as Shengfutong, have been forced to stop the development of new merchants and reorganize the old merchants due to the pre-authorization of cashier cases due to the lax review of merchants. (Yinfa [2014] No. 79, "Notice of the People's Bank of China on Risks of Bank Card Presale Rights").

At this time, some of the acquiring institutions that have not entered the “management list” of the central bank are in large quantities “stealing food”. The POS machines deployed by the above eight institutions at the merchants are called “cutting machines”, just like mobile phones. Like the brush machine, the program inside the POS machine is brushed into its own company - anyway, the other party has been self-contained, and it is impossible to cut back the machine, who has let them "be called to stop adding".

In the process, the terminals that are used by the acquiring institutions to expand the "agent mode" are the "amplifiers" of the market chaos. Once the agent is turned over, "all the machines are dozens of hundreds of units," a person who was interviewed by the machine was told by the reporter.

An official "Notice on the Standardization of Bank Card Acceptance Markets in the First Half of 2014" stated: "Overall, market violations are still high, and new types of violations such as large-scale transaction transfer, trading channels and 'cutting machines' frequently occur, and market acceptance is accepted. The work situation is grim."

How to cut the cutting machine? How many sneak peeks have been developed by the mind-set acquirer to grab the market and “cope” the regulation? What kind of industry background has brought about the status quo of "reasonable chaos"? Who is laughing and crying in this mixed game? "Discovery Finance" "Payment of the Bills Collection" series gives you a glimpse of the unknown story in this industry, and invites you to think about where you are going.

"Stealing food" is coming

Our reporter has a POS purchase order for “Yin and Yang Face”. The positive consumer signature page shows the receipt service provided by Q Company, but the printing on the back of the receipt paper is the competition of Q Company. The company's LO; web site and phone information look just as funny as Coca-Cola poured the beverage into Pepsi's bottle.

What is the secret behind the "Yin and Yang face"? "This is actually the T company's POS machine was cut by the Q company." An industry insider told this reporter.

Company T is among the eight institutions punished by the central bank. The unlucky T company is busy cleaning up the existing merchant vulnerabilities in order to resume the development of new merchants. The application of all MCC codes is also within the scope of self-checking and self-correcting violations.

Here to say what is the MCC code. The MCC code is a four-digit "merchant category code" set by the acquiring institution for the merchant to indicate the main business and industry attributes of the accepted card merchant, and the merchant has to pay the card processing fee for this. For example, “5812” stands for restaurants, and the handling rate is 1.25%; “5311” stands for department stores, and the handling rate is 0.78%; “5411” stands for supermarkets, and the handling rate is 0.38%.

The rate is different, which brings arbitrage space. In order to seize the market, many acquirers will arrange for MCC codes for merchants with a lower rate or even lower two rates. Merchants will be able to pay less fees for this purpose.

Therefore, during the self-inspection of T Company, the two batches were very unhappy.

The first batch of unhappy is the merchants who applied the MCC code. T company's rectification from the merchant perspective seems to be the rate "price increase", of course, they are not happy, looking for other acquirers to help them maintain low rates. The data given by the L company members who are also among the penalized institutions said that the proportion of the original non-compliant merchants who are willing to cooperate with the rectification is 40%. Our reporter asked the other organizations privately about this ratio. The answer was basically: "Where is there so much?"

The second batch of unhappy is the "agents" who help T company to run the market. These small brothers rely on merchants to pay for their profits. In the industry, the acquirer earns 20% of the merchant's credit card rate. The generous acquirer will tell the story to the capital market for the rapid expansion of the scale, and will give the seven components of the money to the agent. Now T company can not be added, the second is to shrink the stock, the agents are less sweet, and some are not willing to follow.

In this way, Q company opportunity is coming.

For those merchants who are about to be "price-raised", Q company sends people to contact. In order to restore the newly added supervision and acceptance that T company must pass the supervision, Q company can not have these concerns, which means that it can pick up the illegal disk. They will tell the merchants that they can maintain the original rate and even discount the POS machine if they are given an "upgrade".

The so-called "upgrade" is nothing more than reloading the filling program inside the POS machine, and the shell and consumables (printing the print order) can save money and use. So the "Yin and Yang face" mentioned above appeared, the purchase order with the information of T company was printed, and the information of the receipt of the company Q was printed.

Interestingly, our reporter learned from industry regulators that in order to defraud the trust of merchants, staff members (including agents) who go to “stealing food” like Q companies will also create fake T company badges and even silver union workers. brand. Merchants can't figure out that the industry is being reorganized. Their demands are: the program "upgrade" is formal, and the second is the rate.

Q company has done it on the surface.

Desperate

"Stealing food" is a door technology.

For Q company, it is first necessary to know where the equipment of the T company is placed, and secondly, it needs to know the parameter information such as the key. Agents of Company T are like a group of “vegetable farmers”. They know very well where the “dish” they have planted and how they are grown. As mentioned above, the agents of Company T are being penalized by T Company and making less money.

“The agents have turned their backs, and the cutting machines are all in batches. Dozens of POS machines can be cut in two days.” When listening to the description, our reporter felt that the acquiring institution that suffered the machine was cut. People are bleeding. He said that the market share of the blood-funded large-capacity market was lost in batches in the past few months, and the cost of acquiring the goods was not earned. "Yangma" continued to stare at the reorganization of the merchants in his hands, but the MCC still exists. It was just being cut away.

"I think this month's rectification will end, we will be allowed to resume new additions, but now the industry is chaotic, and with your reporters writing, it is estimated that the rectification will only become stricter." He sighed.

Say back to the agent, this is obviously the "stolen food" side Q company, how much benefit does the Q company give to dig this batch of high-quality "vegetable farmers"? Our reporter asked a circle in the industry, surprised that not only Q companies do not need to spend money, agents also need to pay the initial fee to Q company.

“It’s not so simple to cut a lot of machines. Only a relatively large third-party payment company has this technology and operational capability. The agents who follow the “stop new” are still rushing to rely on it.” An industry veteran said, “Some payments The company originally collected the money without receiving the agent's initial fee, or it originally received 30,000 and now it is 50,000."

"Stealing food" stole into the bank

A noteworthy phenomenon is that the high-cutting machine incidents in recent months are not only the vicious competition between third-party acquirers, but also the head of the bank's acquiring POS machine. “The time window (8 institutions were punished) opened, some institutions cut the machine high, and even the POS machine at the end did not care.” A related business person analyzed this newspaper, “The former belongs to industry violations, after Those who violate the law violate property ownership."

Here is a background. Commercial banks and licensed third-party payment institutions can accept POS acquiring business, but the practices are mostly different. A third-party organization (or through its agents) generally sells POS machines to merchants. The price of a POS machine ranges from a few hundred to 2,000 yuan. The higher the price of a POS machine is, the more the merchant gets the MCC rate. Cost-effective (this is itself a MCC set code violation); while most commercial banks do not sell POS machines, but rent them to merchants.

Therefore, the ownership of the POS machine placed by the third-party organization in the merchant belongs to the merchant, and the ownership of the POS machine deployed by the bank belongs to the bank. Even if the merchant agrees to “upgrade” and cuts the machine to the POS machine of the bank, it infringes the property ownership.

One case is that in June this year, a state-owned Da Ning Haining Sub-branch conducted a patrol inspection of POS merchants and found that a mobile phone shop of the bank's special merchants had become a “dish” of Q Company. The reporter saw the photo of the POS machine provided by the party, which belongs to the back of the bank's POS machine in the property right. In addition to the original information of the bank, it also posted the label of the Q company. After the card is swiped, the funds are also collected by the Q company.

According to the on-site inquiry of the bank staff, the owner of the mobile phone shop recently said by a friend that as long as the original POS program is downloaded and changed, the card rate can be reduced to 0.38%. The original MCC code of the merchant is 4812 ( Communication equipment and telephone sales), the handling rate is 0.78%. The mobile phone shop owner took the bank POS machine to the illegal tampering procedure, and then returned to the POS machine to install it after 4 days.

Several third-party acquirers “in order to expand the market share of the acquiring market, instruct or instruct the outsourcing organizations to use the cutting machine to seize the merchant resources, and at the same time a large number of counterfeit merchant names and codes, which intensified the malicious competition between the acquiring institutions and disrupted the bank card acceptance market. Order." "In the first half of 2014, the bank card acceptance market specification work bulletin" said.

The story of “Stealing Food” is finished, but there are many questions left. In order to grab the market, Q company “cuts” the rate from 0.78% of the MCC code to 0.38%. As the acquirer, it collects 20% of the merchant's handling fee. Under vicious competition, he really earns less. Mostly? UnionPay has a complete set of monitoring measures for MCC sets. After a large number of cutting machines, how can Q company hide its "eyes"? The next issue of Discovery Finance will continue to reveal the chaos of the payment industry.

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March 31, 2023