Sun Taoran: Where are the huge business opportunities for large-scale implementation of digital currency?

Recently, 63 institutions including CITIC Securities and China International Capital Corporation (ZFZJ.CN) focused on investigating the licensed payment institution Lakala. Chairman Sun Taoran and the new general manager Chen Lie received a reception. During the exchange session, Sun Taoran targeted Digital currency, SaaS, payment rate, local push staff cost Responded to hot issues. There are investors asking questions, Please analyze, for example, within two to three years, where are the huge business opportunities for large-scale implementation of digital currency? In response, Sun Taoran responded: “About the new payment form, we talked about two sentences. First, it will change the payment pattern. Second, it will have an impact on the business format. In the era of digital currency, It will change the position and voice of the acquiring side in the payment industry, including Lakala. For business, it will give birth to many possibilities. After the digital renminbi comes out, all these things may have some changes, which will bring There are many business opportunities. As we just mentioned, in the supply chain, in the clearing and payment between wholesalers at all levels, it is very likely that digital currency will have a very big advantage, and digital currency may also create many other New things, because the entire digital currency is paid by you and all the information is recorded as a record. When we look forward, we can at least see these.” In 2020, La Cala’s performance continues to grow steadily. The annual net profit attributable to the parent is 931 million yuan, a year-on-year increase of 15.43%. From 2015 to 2019, La Cala’s net profit in the first five years has increased by more than 30%. From 2015 to 2020, the compound annual growth rate of net profit reached 50%, and the gross profit margin has remained high at 41%. In terms of strategic planning, Lakala disclosed that the deployment of digital currency and cross-border payment has achieved remarkable results, and the payment ecosystem is taking shape. It is building a technology platform to provide SaaS to enterprises and financial institutions and reconstructing new retail with full supply chain services. By 2023, La Cala will be established “ Payment, technology, new retail “The multi-dimensional merchant service system has achieved one of the best payment scale industries, the first echelon of cross-border payments, the best industrial Internet technology platform industry, and the top three in the new retail industry. Payment ecology , La Kala disclosed that the basis of La Kala payment is the “payment ecology”. By giving full play to the first-mover advantage of digital RMB, iterating payment tools, upgrading the payment industry ecology, and improving La Kala’s merchant structure, forming Merchants, users, banks, expansion agencies, promoters A widely connected ecology. At present, as one of the first two payment institutions to sign a strategic cooperation agreement with the Central Bank’s Digital Research Institute, Lakala has the ability to fully accept digital renminbi transactions. Digital renminbi is a national strategy, and the iteration of the payment method itself will give birth to new businesses. Opportunity, Lakala, as the first batch of in-depth participants, will undoubtedly reap more development dividends. Cross-border payment business will further broaden the scope of merchant services, and the expansion of merchant services will make it possible to implement value-added services. Technology , Lakala disclosed that with payment as the link, technology as the platform, through SaaS and various systems Financial institutions, banks, people, goods, markets All parties are connected to meet the needs of every piece of the ecology by generating data and risk control to help everyone make money. At present, Lakala’s technology SaaS includes corporate SaaS, merchant SaaS, cross-border e-commerce SaaS and financial institution SaaS. Through SaaS services, it covers corporate fund management, account management, risk management, and collection of ordinary merchants and cross-border e-commerce. Optimize various value-added services such as, marketing, operation, etc., and optimize the acquiring system and risk management system of financial institutions to better serve the small and micro merchant groups. New retail , La Kala disclosed that the deep integration of technological services and payment ecology has made the merchant service system more comprehensive and efficient, and the emergence of new retail business has given La Kala merchants more room for service. There are currently 144 million Chinese companies, 12 million retail merchants, and more than 4,000 banks. Lakala has built a business service system of “payment, technology, and new retail” to match the commercial value generated by the closed-loop ecosystem built by all parties. Lakala entered the third-party supply chain platform business market at the end of 2020. In the early stage, samples have been sampled in multiple cities to provide high-quality sources for retail stores, and further promote the in-depth coordination of payment business, supply chain, and technology services. The current market penetration rate is close to that of peers. 3-year level. Attachment: Communication link (Q investor, A chairman Sun Taoran) Q: The 2020 annual report has a more detailed explanation of the operation of digital currency, and also said that there may be an investment of 500 million yuan in the promotion of digital currency in the future. Can you expand or give an example to explain in detail, for example, how our digital currency is connected to the interfaces of various companies. In the future, in the process of using digital currency, how we will do business with UnionPay, or the apps of major banks. Okay, or other institutions that have the ability to act as a digital currency can generate synergy, or they can get more market share. A: Digital currency. In fact, the company established a special department more than a year ago, and a lot of people are participating. However, because this involves the overall progress, it has not been disclosed to the outside world, which is also a requirement of strategic partners. We only announced the strategic cooperation agreement when we entered the pilot program. The investment of 500 million yuan is only our first phase of the plan. In the future of digital currency operation, there are several things that can be seen. The first thing is that all places must be able to use digital currency, just like bank cards and scanning codes back then. When everyone has a digital currency in the future, all the acceptance links will become an acceptable digital currency. This is what we will see in the future. The country’s promotion of the issuance of legal digital currency means that all places that scan codes must be able to accept digital currency today. This is a very big thing to do. This thing requires technical capabilities and system capabilities to be connected. This is the transformation of the business side. The second thing is that from the issuance of digital currency to the circulation and promotion, tens of millions of merchants must be connected to the platform that receives the payment to help merchants quickly acquire the ability to accept digital currency. In the future, there will be many commercial banks. At present, more than 4,000 small and medium banks and rural credit cooperatives do not have the ability to accept digital renminbi. They have to connect with digital currencies. Lakala can provide them with digital renminbi interface services and include An aggregate payment solution within the digital renminbi. Therefore, in the future market of La Cala, we may not only cooperate with merchants, but also provide services for financial institutions and other institutions. The third is to cooperate with our current pilot projects and promotion. For some key points, such as the Winter Olympics, we will do more hands-on activities in advance. These three aspects are foreseeable. For example, in the new retail platform, such a multi-level B2B is the payment from the enterprise to the enterprise, and the multi-level payment at the distribution level. If each level pays a payment fee, even one thousand five or one thousand three. Very high numbers. It is possible that after the emergence of digital currency, through the SaaS system docking, it may be possible to greatly reduce the payment cost. These new innovations are also what we want to do. Q: The company’s logic is very clear. From the small high-frequency payment as the traffic entrance and the SaaS+ stickiness as the channel to improve user retention, it actually falls into the new consumption. The SaaS market is a hot spot for everyone. Can you expand it and share it with us? In fact, SaaS will face, it may be divided into large customers, medium-sized merchants, and small customers. In fact, the three types of play and logic are completely different, because the larger the customer, the higher the customer unit price, but the churn rate is relatively low, but its customization needs There are more, it may be heavier to do, and it may be biased towards the logic of traditional software. However, the small customer may seem to have a low unit price, but the quantity will not be large. This may have a certain relationship with the company’s strategy or thinking. I don’t know how the company considers this in the future? Can you share with us? Thank you. A: We use small high frequency as the entrance, use SaaS + stickiness, and finally enter the new retail and new consumption field. SaaS We form a product system by investing in kilometers, plus our own accumulation in the past. The key to SaaS is the core function, because SaaS is just a payment method and an interactive method. It is a software-as-a-service method. The core depends on your function. What we do is to implement all the functions in the entire link of B2B, cloud stores, and cloud procurement in e-commerce, from the manufacturer to the end user, in the past eight years. For Lakala, the kilometer is equivalent to a semi-finished factory. There are all the accessories in this factory, which can be combined into any product. Lakala combined one thing, which is the system for offline retail stores. We docked the B2B on the cloud shop, docked cloud procurement, a series of functions, and then grafted our original accumulated functions, making this SaaS for the small shop, a user name and account can be used. But after all the data running on this, the payment is no problem, then you have to escrow, the bank can also evaluate your credit, or escrow, and bring the goods at the same time. This is our entry point. At present, the optimization problem of the supply chain must be solved. So our slogan is “good goods”, let it be good goods, more categories of goods, more good price goods, more money, this is what Lakala has to do. Q: If the digital currency level is implemented, we call it a new level, a new payment medium. So in the case of the second payment medium, the future is nothing more than establishing an ecosystem, whether it is a small cloud store or the supply side, or even the demand side. Please analyze, for example, within two to three years, where are the huge business opportunities for large-scale implementation of digital currency? A: Regarding the new payment form, we talked about two sentences. First, it will change the payment pattern. Second, it will have an impact on the business format. In the era of digital currency, the position and voice of the acquirer, including Lakala, in the payment industry will be changed. For business, it will give birth to many possibilities. After the digital renminbi comes out, there may be some changes in all these things, which will bring a lot of business opportunities. As we just mentioned, in the supply chain, in the clearing and payment between wholesalers at all levels, it is very likely that digital currency will have a very big advantage, and digital currency may also create many other new things, because The entire digital currency is paid by you and all the information in the entire process is recorded as a record. If we look forward, we can at least see these. Q: Payment is such a high-frequency application to provide more diversified corporate services to small and micro merchants. What is the key difficulty in the turning point? A: If only payment services are provided to merchants, in fact, the substitutability is still relatively large, but there is still the value of brands and services, and the brands and services themselves are also competitive in payment. After the “96 price reform” , The payment fee rate is going down, but Lakala’s market share is expanding, and profitability is improving, which is to concentrate on the head. If we superimpose it in addition to payment, and reach the merchant’s cash register and reach its shelf, the stickiness with the merchant will increase a lot. In fact, Square in the United States follows this model, which is to enter the cashiers and shelves of merchants. This is from our perspective. The merchant’s point of view is that when we provide these services, we have two benefits. The first one might be more SKUs and better prices. The second and more important thing is that when it puts its sales data, invoicing data and payment data on my platform, we can help it sort out its credit, which was originally unable to borrow money. Enterprises, cooperative banks can lend it to them. So merchants also have this kind of demand. As for why Lakala can do this? We currently include people who may certainly rely on ourselves in the cloud shop in the future. The number of expansion data for a single person and a month has reached more than 20. Why is it that local push is our business? To push this matter, it has a few data to calculate. The first is whether a local pusher can support himself, whether you can increase your monthly sales, the gross profit you earn, and whether you can provide your own salary. This will be a number. For example, if you develop X home in one month, you can support yourself. Second, can it feed the branch company? This branch company has amortized all its costs, so once everyone may assume that the first number is 8 and the second number is 15 for a month, the output per capita reaches 15 At home, this branch is break-even. Third, can you feed the headquarters? That number may be 25. When the per capita production capacity reaches 25, you can feed the headquarters, break even, start making profits, and repurchase. A lot of our data shows that each store purchases a larger amount and quantity in the second and third months. The good news is that our two-month per capita output is in the 60-point supply chain and 80-point system, and the per capita output exceeds 20 companies. For us, we know very well what it is. If this data can be maintained, and if our repurchase data can be maintained, we will look at it for another three months. If these numbers can be maintained, it is very likely to be in this area. We will make progress very quickly. Q: Now the concentration of the entire third-party payment is increasing. However, this rate may actually have a gap of more than 5 times compared with overseas Square. Do you think the rate gap will gradually stabilize through the increase in concentration in the future? The second question, maybe everyone is also concerned that in the context of digital renminbi, it can be anonymous. Will this bring some challenges to our acquiring business in the past? For example, whether the entire market capacity will shrink, the currency may be transferred directly through offline transactions, and it is no longer necessary to complete this liquidation through a third-party acquirer as it is now. A: Of course we hope that our rates are the same as internationally, but the reality in China is not like this, and under such a reality, the entire ecological development is now the best in the world. So I personally think that the matter of rates is a bit like the secondary stock market. The important thing is not how much you buy, but how much you sell. The difference between your buying and selling is what you earn. Therefore, for Lakala and for the acquirer, the important thing is that the space between the cost charged by the merchant and your cost is important, so it affects your income. So if it drops year-on-year, then your space will not change, or if the bottom drops more and the top drops less, your space will increase. This is an understanding of the rate, that is, you cannot look at a value in isolation , But should look at the space between them. Well, when the space is not as big as overseas, for example, what matters is the business management ability and scale effect, which will promote concentration. When this space is large, you may be able to make money by doing 100,000 merchants. But when the space is compressed, companies with less than 1 million merchants or less than 5 million merchants will have been squeezed out, and the rest will be more and more concentrated in the head. Therefore, such a situation is actually beneficial to La Cala. In the past two or three years, in fact, with the downward trend of rate competition, La Cala’s market share and profitability have been expanding. The latter question is the question of the transaction method. The merchant’s demand for payment is not just about swiping the card, you give me the money. It actually has a variety of needs. For example, the first is the need for account reconciliation. For merchants, he has to reconcile the accounts. Every transaction cannot be wrong. All transactions today cannot be wrong. There are errors in handling. There are also many payment-based requirements. These are not offline transactions, which can be solved by handling them yourself. It’s just a form of transaction, and it’s still a relatively small form of it. But behind this form, the entire other merchant services cannot be replaced. We have encountered this kind of merchant, he is willing to accept a payment institution, he is not willing to say that he accepts this and that. Because for him, if 200 goods are sold today, these 200 goods come from four payment institutions. For him, it is a huge workload. He is completely unable to make statistics on today’s sales, purchases, etc. A series of things. A company we invested in has done a lot of services in this area, such as a platform-like SaaS product-Qianacantong. Merchants are willing to treat you only. On this platform, I will clarify all your acceptance methods and needs. . Q: Let me ask again. For example, some customers just want to say that you provide streamlined services and transaction services, such as some newsstands. A: It’s just that you can complete the transaction. There are actually very few such merchants. Not at newsstands. When you buy a newspaper, he takes a small book and writes it down, which magazine you sell, how much money you receive, and takes a small book to keep track of, and then when you receive RMB, small merchants also take it. In a small book, write down how much the buns are, and how much is it. In fact, what payment institutions help merchants do is not just collecting money. After we gave him the cloud shop system, in fact, his ERP and CRM are all in it. For him, after every shipment comes in, it sells. How much we go out, how much we have left, and whether to purchase goods, have all been realized on IT. In fact, this is the impact of technology on business. This impact was originally provided by an independent SaaS company, but now it is only carried in with the service of Lakala payment.