In: Economics
Construct models to find the impact of electronic payment on consumers by using Game Theory and its Nash Equilibrium.
(Users of electronic payment and Electronic payment industry are the players of the games)
Related research on electronic payment
Regarding the research on electronic payment, Helen Colinson (1995) first proposed the concept of electronic wallet, and pointed out that electronic payment with electronic wallet as a tool can become a secure payment method on the Internet. Wendy Ming-Yen Teoh, et al. (2013) revealed that interest, self-efficacy, and ease of use had a significant impact on consumer perceptions of electronic payments. Chinese scholar Zhou Huiling et al. (2010) found that people's doubts about the security and reputation of electronic payment instruments were the main reasons restricting the development of electronic payment tools. Zhao Zhongxin (2012) believed that in order to promote the smooth development of China's electronic payment market, it should strengthen the electronic payment model in e-commerce, and continuously strengthen the adjustment and improvement of various misconducts. Deng Yao (2017) pointed out that under the impact of third-party payment, online banking should take advantage of its high credit and irreplaceability, learn from the experience of third-party payment, constantly improve yourself, optimize service processes. Hu Juan (2016) summarized three aspects of competition between third-party payment and online banking. First, third-party payment robbed the bank's intermediary business and formed a conflict of interest. Second, the convenient and fast third-party payment platform transformed bank customers into Non-bank customers have formed a battle for customer groups. Third, the third-party payment platform recorded huge user behavior big data and formed a data dispute. Yang Yanhui (2017) believes that the development of third-party payment has affected the income of bank intermediary business, and the shortcomings of online banking that do not pay attention to user experience have been amplified. Zheng Huiyin (2017) pointed out that while focusing on regulating third-party payments, it is also necessary to promote new developments in third-party payments.Third-party payment can't just stay in the payment business. It is good at cooperating with the bank, and can develop a new business transaction platform to achieve a win-win situation in cooperation
Game Theory and Its Nash Equilibrium Theory
There are multiple decision-making bodies in the activities studied by game theory. These subjects are related to each other. Game theory mainly discusses the strategic interaction between them. Nash equilibrium was proposed by Nash in 1950 and is the basis of game theory. Nash Equilibrium is a combination of strategies ? ∗=(?? ∗ , ?−? ∗ ), which meets two requirements: • For each player i∈N, can be expected to adopt a combination of strategies s−i ∗ ; • For each player i, si ∗ is his best strategy for coping with s−i ∗ . If G=< N, S1, S2 , … , Sn , u1 , u2 , … , us> is a strategic game model with complete information, the strategy combination s ∗=(si ∗,s−i ∗ ), si ∗∈Si ,s−i ∗ ∈S¥Si is a Nash equilibrium of G. If for ∀? ∈ N, ?? ∗ is the opponent strategy combination of i under s−i = s−i ∗ conditions, the optimal reflection strategy of the player i is ui (si ∗ , s−i ∗ ) = ui(si , s−i ∗ ) si∈Si max or ui (si ∗ , s−i ∗ ) ≥ ui (si , s−i ∗ ),∀si ∈ Si , if the inequality pair si ≠ si ∗ is strictly established, the si ∗ is the strict Nash equilibrium of G.Game theory believes that the player with rational choice behavior i will choose the strategy combination ?? ∗ in the Nash equilibrium because he can expect the opponent to choose ?−? ∗ , and ?? ∗ is the optimal response to ?−? ∗ . If the player i chooses si ∗ and the opponent does not choose ?−? ∗ , it may reduce the opponent's payment. So each participant will choose the strategy combination ?? ∗(i=1, 2, …, n), and the result will show the Nash equilibrium ending s *=(?? ∗,?−? ∗ ). Therefore, in the complete information static game, the Nash equilibrium can be used to predict the strategy combination of each participant, and then predict the various game outcomes that the analyst is concerned about.
Safe and convenient game analysis of online banking and third party payment
Among them, N={Online Banking, Third Party Payment}, the limited policy set of online banking is S1={ α1 =Security, α2 =Convenient}, and the limited policy set of third party payment is S2={β1=Security, β2=Convenient} . The payment of the person in the game = harvest - pay. Harvest: electronic payment, market share, number of customers, growth rate, profit. Pay: technical costs, service costs. Thus, the payment matrix is obtained, and the game model is constructed as shown in Table 1. In order to solve the Nash equilibrium of the above game model, the hypothesis is proposed: • (1) When the payment of the online bank is a11, and the payment of the third party payment is b11, the thresholds for their use are relatively high. However, due to the high credit level of online banking, its market share and number of customers will be more than third-party payment. • (2) When the payment of the online bank is a12, and the payment of the third party payment is b12, it improves the user experience in electronic payment on the premise of ensuring certain security. Therefore, third-party payment will gain a larger market share, and a larger number of customers. Comprehensive (1) (2) can be obtained: b11a11. • (4) When the payment of the online bank is a22, and the payment of the third party payment is b22, both parties are likely to obtain a large number of customers, which may equalize the market share. Comprehensive (3) (4) can be obtained: b21a12.
Game Analysis of Competition Cooperation between Online Banking and Third Party Payment
Similarly, build a game model as shown in Table 2. In order to solve the Nash equilibrium of the above game model, the hypothesis is proposed: • (1) When the payment of the online bank is ?11, and the payment of the third party payment is ?11.Third-party payment is just to increase the business volume of e-commerce. Online banking has gained passenger traffic and gained a lot of revenue. Therefore, it can be judged that the income obtained by the online bank is greater than the third party payment: ?11>?11. • (2) When the payment of the online bank is a12, and the payment of the third party payment is b12. The competitive advantage of third-party payment comes from the extremely low cost and threshold, which is quickly recognized by consumers, and the rapid increase in consumers using Alipay and bank cards, the gains from third-party payments are greatly increased. Comprehensive (1) (2) are available: b12>>b11. Due to the surge in consumers using fast payment, the amount of payment through the bank card has also increased, so it can be judged: a12>a11. • (3) When the payment of the online bank is ?21, and the payment of the third party is ?21, that is, Online banking greatly enhances convenience and limits Alipay quotas and increases rates. Third-party payment is only developed to start online banking functions or to conduct business only in areas such as micropayments. Comprehensive (1) (3) can know: online bank payment a21>a11under this combination of strategies.• (4) When the payment of the online bank is ?22, and the income of the third party payment is ?22,Third-party payment is more convenient for consumers without improving security. so b22>a22. Comprehensive (2) (4) can be judged: under the strategy of competition by third parties, the convenience of not reducing security is deeply rooted in the hearts of the people, so its customers and capital flow are huge. At this time, the income from the online banking adopting the cooperation strategy is greater than that from the competition strategy, that is, a12>a22. Comprehensive (3) (4) available: payment by third party payment b22>b21.
Game Analysis of Innovation Supervision between Financial Supervision and Third Party Payment
Similarly, build a game model as shown in Table 3. In order to solve the Nash equilibrium of the above game model, the hypothesis is proposed: • (1) When the financial regulator's payment is a11, and the third party's payment is b11, the innovative investment in third-party payments will not be rewarded.It can be judged that: b11 is small (innovative investment, no additional income), and a11 growth is slow. • (2) When the financial regulator's payment is a12, and the third party's payment is b12, such as prohibiting most innovations, third-party payments will tend to be non-innovative. Comprehensive (1) (2) can be judged: b12> a12 (no innovation input, no additional income). • (3) When the financial regulator's payment is a21(such as allowing most innovations), but there are certain restrictions (such as limits) to prevent third-party payment innovations from impacting traditional financial institutions. On the other hand, the third party’ s payment is b21, and innovation will continue to bring prosperity to Internet finance, and also bring traffic to traditional financial institutions such as online banking and commercial banks. Therefore, comprehensive (1) (3) can be judged:?21>?11,?21>?11. • (4) When the financial regulator's payment is a22 and the third party’ s payment is b22, there is a certain regulatory cost, which will not bring financial risks, but the development of electronic payment will become slow. Comprehensive (3) (4) can be judged: b22a22.
conclusion
With the conclusion of the integrated security and convenience game model and the competition and cooperation game model, Online banking should choose a convenient and cooperative development strategy, that is, to simplify and optimize the operation process as much as possible while maintaining its own security advantages. On the other hand, online banking should continue to cooperate with third-party electronic payment service providers to strengthen big data analysis, achieve complementary advantages, and achieve win-win cooperation. Based on the conclusions of the three models, the optimal strategy for third-party electronic payment service providers is continuous and convenient strategies, competitive strategies and innovative strategies. That is to say, third-party electronic payment companies continue to innovate on the premise of ensuring security to bring more convenient and perfect payment experience to users. In addition, when dealing with the bank, third-party electronic payment companies should maintain a certain cooperative relationship with online banking, while maintaining a competitive attitude and maintaining competitiveness in the electronic payment market through continuous innovation. From the conclusions of the innovation and supervision model, it is concluded that the optimal strategy of financial regulators is moderate supervision, and it is very important to grasp the supervision. Moderate regulation, that is, financial regulators should allow for compliance innovations that encourage third-party electronic payment service providers. For example, when supervising Alipay, WeChat payment and other third-party payment service providers that are already in the world's leading level, they should be given a moderately loose regulatory policy and regulatory recognition. In order to maintain the leading and promoting of the leading enterprises in the electronic payment market innovation.