Commercial bank and

Third-party online
payment platform
SHARVIN VAMUDERAM
1141124783
IHSANNOR RAHMAT SHAHADI BIN JOHN ROSDI
1141125315
NOOR KHAIRAH HAZLIN BINTI MASLI
1122702804
NURUL SYUHADA BINTI ZUL RUSHDI
1141123342

What is Commercial
Bank?
Is a financial institution that provides services,
such as accepting deposits, giving business loans
and auto loans, mortgage lending, and
basicinvestments productslikesaving
accountsandcertificates of deposit
There are 24 commercial banks in Malaysia. Eg :
CIMB Bank Berhad, Public Bank Berhad, Malayan
Banking Berhad ( Maybank)

ROLE OF COMMERCIAL BANK

1) Mobilising Saving for Capital Formation
Help in mobilising savings through network of
branch banking
Introduce variety of deposit schemes to suit the
needs of individual depositors for people in
developing who earn low income.
Banks channelise them into productive
investments which it will help in the capital
formation of a developing country.

2) Financing Industry
Provide short-term, medium-term and long-term
loans to industry.
For Example: In India : Commercial bank provide short-term loans
In Latin American countries like Guatemala:
Commercial bank provides medium-term loans for
one to three years
In Korea: Commercial banks also provides long-term
loans to industry.

3) Financing Trade
Commercial Bank help in financing both internal
and external trade
They provide loans to retailers and wholesalers to
stock goods and also help in the movement of
goods from one place to another by providing all
types of facilities
Commercial bank also finance both exports and
imports of developing countries

4 ) Financing Agriculture
Help the large agricultural sector in developing
countries in many ways
Commercial banks provides loans to traders in
agricultural commodities and opens network of
branches in rural areas to provide agricultural credit.
Provides finance directly to agriculturists: For the marketing of their produce,
For the modernisation and mechanisation of their
farms
For providing irrigation facilities and for
developing land

5) Financing Consumer Activities

Commercial banks advance loans to consumers
for the purchase of such items as houses (House
loan) , vehicle (Car & Bike Loan) and Personal
loan
This will lead in the raising the standard of living
of the people in the country

6) Help in Monetary Policy

Helps the economic development of a country by
faithfully following the monetary policy of the
central bank.
This is because the Central Bank of the country
depends on the commercial banks for the success
of its policy of monetary management in keeping
with requirements of a developing economy.

What is THIRD PARTY

ONLINE PAYMENT
PLATFORM?

A third-party online payment platform

such as PayPal, Alipay, Wepay and etc
which lets you accept online payments
without a merchant account of your
own. Instead, they let you use their
merchant account under their own
terms of service, usually with very little
setup required

Background of the
third party online
payment Alipay
Alipay was founded in 2004 by Alibaba Group and its founder Jack
Ma.
Origin of China.
According to an analyst research report, Alipay had the biggest
market share in China with 300 million users and control of just
under half of China's online payment market in February 2014.
Although China boasted nearly 100 million Internet users at the
end of 2004, second only to the United States, online payment has
been slow to develop in a country where cheques and credit cards
are rare and cash is king.

Current achievement :
Alibaba Affiliate Ant Financial Raises $4.5 Billion in Largest
Private Tech Funding Round
Chinas Ant Financial raises fresh funds at a roughly $60
billion valuation.
https://www.youtube.com/watch?v=dDfdUUvHoiI

PayPal
Origin of United States of America
In a town called Palto Alto, California, it was founded in
December 1998.
The vision that PayPals founders Max Levchin, Elon
Musk, Peter Thiel, Luke Nosek, and Ken Howery
formed was finally coming together.
Initially, Levchin and Thiel launched Confinity, which
later merged with the online banking company X.com.
PayPal eventually become the main focus and later
was used as the name of the company. X.com changed
its name to PayPal in June 2001.
PayPal has operated over 190 countries and have over
173million users in 2015.
PayPal have a total assets of US$28.88 billion in 2015.

WePay
WePay was founded by Rich Aberman and Bill Clerico
in 2008.
Origin of United States of America
The idea was borne out of the difficulties that Aberman
faced in raising cash for his brothers bachelor party.
He wasnt able to access money from friends all over
the country and had to manage through a series of
bills, cheques and PayPal transactions.
He studied the weaknesses ofPayPaland along with
his friend Bill Clerico, founded WePay.

 With funds close to $1.65 million from Augusta

Capital, they started setting up their offices and
planning out strategies.
They started out when internet was just about to
become a dependable place for online money
transactions.

Role of Third-party Online

Payment Platform
(Alipay,PayPal,WePay)
ALIPAY
Alipay.com is a third-party online payment platform
with no transaction fees.
Alipay provides an escrow service, in which consumers
can verify whether they are happy with goods they
have bought before releasing money to the seller.
Alipay operates with more than 65 financial institutions
including Visa and Mastercard to provide payment
services for Taobao and Tmall as well as more than
460,000 Chinese businesses.

PayPal
Paypal is an International online payment system.
Online money transfers serve as electronic alternatives
to traditional paper methods like checks and money
orders.
PayPal is one of the world's largest Internet payment
companies.
The company operates as an acquirer, performing
payment processing for online vendors, auction sites
and other commercial users, for which it charges a fee.

WePay
WePay is an online payment service provider in the
United States.
The company provides s payment API to platform
businesses such as crowdfunding sites, marketplaces
and small business software.
The WePay API exposes a number of WePays core
functions to developers who would like to customize
the process of accepting payments.
Developer can be more flexible in designing payments
for their own websites and applications.
It gives a flexible way to create recurring charges,
which can use it for anything from yearly product
subscriptions to recurring rent charges. Most
subscription charges are created using the
/preapproval call.

Advantage &
Disadvantage of PayPal
Advantage

Disadvantage

1) Paypal guarantee against 1) Paypal can immediately

fraud
freeze our account and
hold our money.
2) It saves time
2) Might leave you with very
limited options and
3) Money can be sent
without proper
abroad
explanation.

Advantage &
Disadvantage of WePay
Advantage
1) Automatic Direct
Deposit
2) Instant account
approval
3) Protection against
fraud

Disadvantage
1)They lack the depth of
customization options.
2)Long Processing Time
3)Withheld Funds

Advantage &
Disadvantage of ALIPAY
Advantage
1) Instant payment solution,
maintain the fluctuation
of funding.
2) Buyers enjoy the secure,
simple and convenient
payment experience
3) Payment can be refunded
within 3 months in order
to enhance the
confidence of online
shoppers and assist to
deal with trading dispute

Disadvantage
The money loss during using
online payment system
1)

2) The personal information loss

during using online payment
3) It is a bit confusing at the
beginning
stage. So it is quite
possible to enjoy

PRICING POLICY
PAYPAL
PayPal takes 2.9% + $0.30 per transaction and
has no setup or monthly fees. (Source:
PayPal merchant fees)
WEPAY
WePay charges a 3.5% transaction fee (with a
$0.50 minimum) for credit card transactions and
$0.50 for bank payments, with no setup or
monthly costs. (Source:WePay fees)
ALIPAY

NO TRANSACTION FEE

Factors that increasing in

usage third party online
payment
A third-party processor lets us accept online payments
without a merchant account of our own.
Can complete the online payment timely and efficiently.
Instead, they let us use their merchant account under

their own terms of service, usually with very little setup

required.
Payments may be made only through Online Banking at

this time which is more easy to use.

 We can cancel up to time of payment processing

and it is also in larger maximum amount.
Uses same process as Bill Pay for funds sent to
incorrect account by using Paypal.
Alipay allows Chinese customers not only the
comfort of enjoying virtual services in China, but
they can also easily sign up for a Virtual office in
Paris, London or Sydney.

Are Paypal, WePay and

Alipay going to kill banks?
According to Accenture, competition from PayPal,
Alipay, WePay and the likescould reduce
traditional bank revenues by one third by 2020.
This phenomenon represents a major challenge to
the banking sector, as one quarter of banks
revenues are generated from processing
payments. Lets look deeper into it.

CHALLENGES OF
COMMERCIAL BANK
TOWARDS
PAYPAL
High street banks face a challenge to maintain
market share amid a digital revolution.
Nobody can doubt that transitioning to a digital
strategy is essential for any customer-facing bank
given the potential for greater speed, reliability
and security of payments and other services.
But interestingly, the strongest challenge is
coming not necessarily from high street brands or
technology companies outside of finance, but
from payment service providers

 PayPal does not offer full current account services,

but allows customers to hold balances and
withdraw funds to their bank accounts

CHALLENGES OF
COMMERCIAL BANK
TOWARDS
WEPAY

Commercial banks are loosing deposits on their

financial statements.

For commercial banks, this is leading to a decline

in income from individual customers and therefore
is squeezing their profit margin.
Non-banks (e.g. Paypal, Wepay, E-wallets) are just
ordinary intermediaries, as they cannot accept
direct deposit, offer checking accounts, or pay
interest, and therefore play no direct role in the
payment system.

CHALLENGES OF
COMMERCIAL BANK
TOWARDS
ALIPAY
As online investment product expand, they absorb
some of the funds.
It would have flowed into bank deposits, which
effect the fund raising.
Company like Alipay have no experience
managing massive funds, the security is
challenging for online funds, which are vulnerable
to the theft of personal information.

 If they reached the limit of management

capability for such a large product, it could not
guarantee the return, it could be disaster for
investors.

HOW THE COMMERCIAL

BANKS HANDLE THE
CHALLENGES
PAYPAL

Financial institutions are going to have to focus on

taking consumers with them on that digital journey.

Banks and companies should take advantage of

each others strength.

The technology sectors ability to innovate and

access new customers, and banking industrys long

history of fund management.

WEPAY
Enable a digital ecosystem beyond traditional
Banking by enabling IT systems to interact with
other banks and investment services firms and
other entities that collectively deliver value.
In an effort to stay ahead of the curve, banks
should starting to create their own mobile
application to cater to members.
Some are choosing to partner with mobile
payment providers, while others are developing
apps to move further into the commercial lives of

ALIPAY
Banks need to be flexible and creative enough to
compete with the online payment company that
have built empires on the ability to quickly roll out
innovative digital products.
Example: Yue Bao took only 6 months to develop,
from product design to launch.
Offered few options for investment beyond
savings accounts, and real estate and regulations
set a ceiling on interest rates which bank can
offered depositors.

 By emphasizing partnership between banks and

technology companies, instead of cut-throat
competition can reduce risk.
Chinas central bank has announced plans to limit
third-party online payment services. The new
draft rule which will limit the amount an individual
can pay via third-party online payment accounts
to 5,000 yuan per day.

RECOMMENDATION
Commercial banks should introduce a new
payment system with a various types of usage/
function which enables customer to enjoy various
types of facilities through their system
Commercial bank should join together with third
party online payment so that both parties can
have a win & win situation. For eg, commercial
bank can cover up the weakness of the third party
owns which will lead to a successful financial
organisation and profit can be earned by both
parties.

THANK YOU

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