LINE Pay (7722.TW) was officially listed in Taiwan on December 5. It plunged more than 8.5% at the opening, with the stock price as low as 465 yuan. If the winning investor sells at the lowest opening point, his original expectation of making a cash profit of 80,000 yuan will become a cash loss of 43,000 yuan. As Taiwan's first listed third-party payment company, how will LINE Pay's business develop in the future? The following is an in-depth report from " THE INTERN" in November 2024:
Third-party payment provider LINE Pay (stock code 7722.TW) was listed on the IPO in January 2024 at 348 yuan per share. Six months later, it applied to the stock exchange for listing and was approved. It is the first listed company in Taiwan. third-party payment company.
LINE Pay has been operating in Taiwan for nearly 10 years. Currently, it has more than 12.7 million users. LINE Pay users have more than 18.3 million cards bound to them, and more than 8 million co-branded cards and point rewards cards have been cooperated with banks. It has become an indispensable part of people's lives. Few payment instruments. LINE Pay Chairman Ding Xiongzhu said at the pre-IPO results presentation today (11th) that LINE Pay will focus on expanding the digital ecosystem in the future and create more value for Taiwan's capital market.
Integrate users in 3 stages to build your own digital ecosystem
Looking back at LINE Pay's development strategy, it is divided into three stages based on the user base. The first is the payment platform, the second is towards the points feedback platform, and the next step is the payment marketing platform.
LINE Pay is actively building its own digital ecosystem, which is not limited to payment functions, but also integrates multiple services such as membership cards, invoice carriers, and payment. It also attracts consumers through LINE Points points feedback and enhances user participation through instant discounts. .
The application scenarios of LINE Pay connect online and offline payments, ranging from daily shopping to transportation and dining, attracting users with a wide range of usage areas. In terms of marketing strategy, the close connection between LINE Pay and LINE official accounts allows merchants to conduct precise marketing based on user consumption behavior, and enhance brand stickiness through tag classification and ecosystem, further encouraging consumers to repurchase and interact with the brand. In addition, LINE Points are often used as promotional rewards to increase brand exposure and customer loyalty.
In 2023, Taiwan's total consumer market will be approximately 10.74 trillion yuan, of which the retail market will account for 53%. This is the market opportunity that LINE Pay is targeting. The total transaction volume of the platform reached 681.2 billion yuan, the number of transactions exceeded 920 million, and it has more than 570,000 payment locations. In the future, LINE Pay plans to strengthen the development of the online market, expand more physical payment locations, and extend its reach overseas to achieve cross-border payment and marketing. "We want to create a transnational service environment to allow merchants far away from overseas. , you can target customers in other countries."
Work with banks to "cultivate" users, master consumption data, and improve user stickiness
In the second half of 2020, LINE Pay's full-year net profit turned positive, with revenue growing at a compound rate of 2.4 times, and profits growing year after year. As of October 2024, revenue will reach 5.1 billion yuan, an annual increase of 31%. When dividing the revenue proportion, transaction fees are the main source of revenue, accounting for 83% of the total revenue, followed by financial promotion cooperation revenue, accounting for 12%.
Ding Xiongzhu shared that in the early days of starting a business, "costs were high and gross profits were low," but the net profit margin has remained around 10% in the past three years. On the other hand, Jiekou Payment, the dominant electronic payment company, has a pre-tax net loss of 100 million yuan in the first half of 2024. Still losing money, why can LINE Pay deliver such impressive results?
Taking a closer look at its core business, in addition to the third-party payment that it started with, there are also co-branded cards and point reward cards, ticket issuance (electronic gift cards), advertising sales, financial industry cooperation, etc., which is equivalent to the C-side (customer) and The B-side (enterprise, business) is all involved. After people are accustomed to using LINE Pay to check out, they will also tend to apply for a credit card co-branded with it.
For LINE Pay, cooperation with banks can collect relevant data and then carry out personalized marketing. Ou Suhua, a full-time associate professor of EMBA at Soochow University Business School, said that young people, especially consumers under the age of 20, have gradually moved away from traditional credit cards and instead relied on digital payment tools for daily transactions.
For young people, mobile payment has become a "rigid need". The demand for credit cards is mostly concentrated after their consumption needs gradually upgrade, for example, when they have higher consumption needs, or need the convenience of installment payment or international payment. During sex. For China Trust, the cooperation with LINE Pay is to gradually guide young customers from digital payments to credit cards through such a "nurturing strategy."
The LINE Pay card provides a digital payment method that is easy for young people to use. As they grow and their income increases in the future, they will naturally demand the convenience of credit cards and additional features such as installment payments. This transition model from "digital payment" to "credit card" has also allowed traditional financial products to gradually integrate with the consumption habits of young people. This is a win-win situation for banks and third-party payment providers. It can not only increase user stickiness, but also capture key consumption records and customer information.
The average daily payment and receipt is close to that of electronic payment. Will you consider applying for an electricity payment license in the future?
However, what has attracted outside attention is that LINE Pay, which has applied for listing, is now a "third-party payment" (mainly used for online shopping or services. Consumers choose third-party payment as a payment method when shopping, and there is no need to directly contact them during the transaction. Sellers conduct money exchanges), but the transaction amount it handles is actually close to the level of "electronic payment" (users can perform daily consumption, transfers, stored value and other operations through mobile apps, providing more comprehensive financial services) .
According to regulations, if the average daily transaction volume of third-party payment agents exceeds 2 billion yuan, they must apply for an electronic payment license from the Financial Supervisory Commission. Ding Xiongzhu said that the current transaction volume has not yet met the requirements, but he has also begun to prepare relevant strategies.
However, why don't LINE Pay, which has a large transaction volume, actively apply? Because electronic payment is not limited to collection and payment, but also includes stored value, transfer and other functions. Because the functions are more diverse, it will be subject to stricter supervision. Once you apply for an electronic payment license, LINE Pay will be tested even more. In addition to implementing the real-name system requirements of the competent authorities, you must also upgrade your technology and update your business model. "Since you are applying for an electronic payment license, you should think about how to convert it into a beneficial business model."
