Alipay announces to charge withdrawal fee, will blockchain make Alipay unemployed?

Yesterday, Alipay officially released the "Notice on the Adjustment of Some Alipay Service Rules". Alipay will charge a certain service fee for the part of individual users that exceeds the basic free withdrawal limit from October 12, 2016. Each individual user enjoys a basic free withdrawal limit of RMB 20,000. After exceeding this limit, a service fee of 0.1% of the withdrawal amount will be charged. "Increase in comprehensive operating costs" has always been a concern for third-party payment platforms. Are there other systems to reduce costs?

As expected – overall operating costs increased

Yesterday afternoon, Alipay officially released the "Notice on the Adjustment of Some Alipay Service Rules", stating that due to the increase in operating costs, Alipay will charge a certain service fee for the part of individual users that exceeds the basic free withdrawal limit from October 12, 2016. Each individual user has a basic free withdrawal limit of RMB 20,000. After exceeding this limit, a service fee of 0.1% of the withdrawal amount will be charged. If the single amount is less than RMB 0.1, it will be charged at RMB 0.1.

Alipay's official explanation is: "Overall operating costs have risen", which seems to coincide with the reason why WeChat Pay charges a fee for cash withdrawals. Tencent CEO Ma Huateng once said that in response to WeChat Pay's cash withdrawal fee, third-party payment platforms have always borne the bank fee of one thousandth of the transfer from the bank system to the third-party payment account on behalf of customers. Therefore, when the number of users reaches a certain base and the number of cash withdrawals increases explosively, considerable fee costs will be generated behind it. Alipay and WeChat are the two third-party payment platforms with the largest number of users. In theory, they have passed the stage of explosive growth and the burden of costs has long been borne.

LendingClub co-founder Su Haide: Blockchain will make Alipay unemployed

During the LendIt fintech summit in July, Soul Htite, CEO of Dianrong.com and co-founder of LendingClub, said that "blockchain will make Alipay unemployed."

Is this statement too alarmist for Alibaba? Perhaps it is not groundless.

Soul believes that blockchain has a disruptive effect on the payment industry. With blockchain, cash flow between people goes directly through banks without going through a third party. If all banks use blockchain, Alipay and WeChat Pay will be useless.

"Blockchain" is a series of data blocks generated by cryptographic methods. Each data block contains information about all network transactions in the past ten minutes, which is used to verify the validity of the information (anti-counterfeiting) and generate the next block. Everything stems from the underlying technology that supports these cryptocurrency protocols.

Is decentralization the ultimate feature of blockchain? This raises a series of questions: who moved whose cheese?

Visa Europe approves private permissioned blockchain solution

Visa Europe has recently shown a special interest in blockchain technology, similar to many banks that are also keen on distributed ledgers. However, Visa Europe will not use an open blockchain, such as Bitcoin's blockchain, but a private permissioned blockchain solution. Visa Europe's head of digitalization and innovation Shahar Fridman said.

Digital currency is issued by the central bank, not decentralized

“A new species or new phenomenon often greatly promotes the expansion of theoretical boundaries. It is foreseeable that in the future, there will be a new field between the two poles of centralization and decentralization.”

This sentence comes from the special topic of research and discussion on central bank digital currency released by the preparatory group of the Digital Currency Research Institute of the People's Bank of China.

The central bank has taken a fancy to the superiority of the underlying technology (blockchain) used by Bitcoin, and uses blockchain to issue and manage digital RMB. Its content indicates that the central bank will transform the existing digital currency according to demand to produce a customized and power-centralized currency - digital RMB. The central bank has the right to issue currency in digital RMB, just like traditional RMB. For security reasons, only the central bank has the right to generate blocks and package transactions.

Introducing centralized elements may be a better way to promote

Recently, Bai Shuo, former chief engineer of the Shanghai Stock Exchange and director of the ChinaLedger Technology Committee, expressed his views on the decentralization of blockchain. He said that if it is technically proven that the introduction of centralized elements is feasible, blockchain technology will have fewer legal and compliance obstacles when entering the financial battlefield after the introduction of centralized elements, and regulators will have fewer concerns about the protection of the rights and interests of financial consumers and systemic and global risks. This will be conducive to blockchain technology entering the main financial battlefield and giving full play to its technological advantages.

Decentralization is neither the essential attribute nor the inevitable inference of blockchain in theory or practice. Introducing centralized elements into blockchain from a positive perspective is of great significance for promoting the implementation of blockchain technology in the main financial battlefield.

Ripple's Interledger Protocol Philosophy

According to Ripple's official explanation, banks basically run their own accounting systems in a huge network, which is composed of independent machines from different countries. Banks don't like to put machines abroad, and they don't like to let machines placed abroad verify domestic transactions. In short, they don't like public processing methods, and they don't like semi-public processing methods either. Because both methods may give outsiders the opportunity to peek into their internal data.

So how do they like to use blockchain technology? Yes, "private blockchain" banks are very willing to "fork" Ripple's code to build their own internal systems.

But banks are destroying the value of blockchain by doing so. Marly Gray, head of Microsoft's Azure blockchain project, said: "If blockchain is only used internally by a single organization, then it is basically worthless."

So what can be done? In order to resolve this contradiction, Ripple developed the "InterLedger" protocol, which can be said to be a compromise.

The Interledger protocol creates a system in which two different accounting systems can freely transfer money to each other through a third-party "connector" or "verification" machine. The accounting system does not need to trust the "connector" because the protocol uses a cryptographic algorithm to create a fund custody for the two accounting systems and connectors. When all participants reach a consensus on the amount of funds, they can trade with each other.

In theory, Interledger is compatible with any online accounting system, and banks' existing accounting systems only need minor changes to use the protocol.

The Interledger protocol developed by Ripple has also been favored by Microsoft and will be added to Microsoft's BaaS platform. Marley Gray said:

“With so many blockchains, I hope they can be freely connected, work together, and allow each chain to play its own advantages.”

Integration of various platform systems around blockchain

According to Marley Gray, director of U.S. financial services technology strategy for Microsoft Azure:

“Blockchain and the entire system it supports are developing rapidly. We expect that Microsoft Azure will be the best in the development, testing and deployment of distributed ledgers, whether in the ‘cloud’, on-premises, or hybrid.”

In Microsoft Azure's BaaS system, existing partners include ConsenSys, Ripple, Eris Industries, CoinPrism, Factom, BitPay, Manifold Technology, LibraTax and Emercoin.

There will be more integration of system platforms related to the underlying technology of blockchain. Different fields are like different mountains. Non-IT people may feel a little overwhelmed when they see this. Perhaps they can hear more detailed explanations and grasp the latest developments at the Shanghai Blockchain International Week held by Wanxiang Blockchain Laboratory from September 19 to 24, 2016. Many industry experts such as Baishuo, Microsoft, Circle, and Factom attended the summit as guests.

The era of "blockchain+" has arrived as expected. Whether it is the changes in personal payment systems or the application of digital technology software, the positive impact brought to people by this increasingly perfect and integrated system platform technology cannot be underestimated.