Mobile payment, third-party payment platform entry and information sharing in supply chains

Abstract

With the development of information technology, increasing retailers cooperate with third-party payment platforms (3PPs) to provide mobile payment service for consumers. The entry of 3PPs into supply chains, not only changes the cash flow, but also decreases consumer price sensitivity and stimulates demand by facilitating credit consumptions. Moreover, information sharing becomes more feasible with the help of 3PPs. To study the impacts of 3PP entry, we build game-theoretic models in a supply chain consisting of a manufacturer, a retailer and a 3PP, and derive the equilibrium in both the non-information sharing and information sharing cases. We show that the 3PP should make a reasonable commission rate which can lure the retailer to introduce the 3PP as well as maintain the 3PP’s profitability. The 3PP entry allows the retailer to set a higher price without decreasing the demand. However, to seize all of the benefit of the 3PP entry, the first mover manufacturer increases the wholesale price to a large extent. As a result, the 3PP entry causes a win-lose situation for the manufacturer and the retailer. The supply chain can be better off from the 3PP entry if it can significantly decrease consumer price sensitivity or its fixed investment cost is low. Furthermore, we find that information sharing benefits the manufacturer and the 3PP but harms the retailer. While information sharing always decreases the expected profit for the supply chain without the 3PP, it may increase that for the supply chain with the 3PP. To improve the supply chain profitability, we suggest to provide incentives for retailer information sharing if the 3PP can significantly decrease consumer price sensitivity (i.e., the proportion of the 3PP users is higher, the grace period of credit consumption is lower, or the cash opportunity cost is lower).

Sustainable Development of a Mobile Payment Security Environment Using Fintech Solutions

“…Firstly, this study shows how a higher level of platform security leads to users having a positive perception of convenience, interoperability, and trust with regard to MPS (Hypotheses 1a, 1b, 1c). This finding is in alignment with the various studies that find platform management and its equipped level of security to contribute towards a higher perception level of platform requirements [37,80,81]. For example, Fan et al [81] emphasized that, with an effective cooperation between the retailers and the third-party payment platform, the supply chain can collectively reduce users price sensitivity and even stimulate…”

“…This finding is in alignment with the various studies that find platform management and its equipped level of security to contribute towards a higher perception level of platform requirements [37,80,81]. For example, Fan et al [81] emphasized that, with an effective cooperation between the retailers and the third-party payment platform, the supply chain can collectively reduce users price sensitivity and even stimulate market demand by facilitating the consumptions patterns of users. Similarly, platform security is also regarded as users subjective evaluation of MPS security [80].…”

Innovation information sharing between two competitive supply chains

“…Fan et al. (2020) analyze a supply chain with a third‐party payment platform (3PP), which could decrease consumer price sensitivity. They find that without the 3PP, demand information sharing always hurts the supply chain, but it may benefit the supply chain with the 3PP.…”

“…Huang et al (2020b) find that the manufacturer's incentive to share demand information may be higher in the endogenous channel structure (supplier encroachment) than that in the exogenous channel structure (either single channel or dual channel is given). Fan et al (2020) analyze a supply chain with a third-party payment platform (3PP), which could decrease consumer price sensitivity. They find that without the 3PP, demand information sharing always hurts the supply chain, but it may benefit the supply chain with the 3PP.…”

Operational risk assessment of third-party payment platforms: a case study of China

“…Third-party payment (TPP) is one of the core forms of the financial technology (Fintech) industry (Chen et al 2019 ; Liu et al 2020 ; Thakor 2020 ). As mentioned by Lee and Shin ( 2018 ), Yao et al ( 2018 ), and Fan et al ( 2020 ), TPP platforms are independent non-financial institutions that provide payment services connecting bank payments and settlement systems of businesses and commercial banks. The rise of TPP has greatly improved the convenience and applicability of traditional cash and credit card payment transactions (FSB 2017 ; Xia and Hou 2016 ; Yao et al 2018 ).…”