Libaiqu CEO talks about fingerprint payment operation model: service industry "hypermarket" (VC291)

According to Chen Xiaofeng, CEO of Libaiqu, a payment operator for fingerprints, payment is not an end, but a means—the purpose of consumer payment is good quality and low price, and the purpose of merchants is to obtain profits.
Fingerprint payment is still a new concept in the country. After completing nearly 4 years of internally demanding operational tests within the bank, Libaiqu has already explored the promotion path.
This approach is: centralized procurement, to become a hypermarket in the service industry. Libaiqu's fingerprint payment product "FingerPay" paid a large amount of cash to these partners in advance to purchase services, which is equivalent to opening a large stored-value card. All FingerPay users use this big card together. In this way, users can enjoy the best discount for merchants without any risk.
This is similar to group buying but different. Group purchases are also centralized purchases, but they do not master the circular "cash flow", so the discount is limited; due to their limited consumption, first payment, merchant consumption discrimination, peer competition and other factors, the user stickiness of the group purchase website is not high.
Libaiqu defines fingerprint payment as a new business of banks, just like bank passbooks, cards, telephone banking, and online banking services. Libaiqu is both a bank's technology provider and operating partner.
The finger-pay model has also received favor from capital. Libaiqu recently announced that at the end of 2010, after careful selection, it rejected many international capitals such as Citigroup, Jinguang Group and Softbank, and finally accepted a huge amount of capital injection from a world-class consortium including CICC, Lenovo, CDH, etc. 500 million yuan. And plans to establish a joint venture company with Citigroup overseas to jointly explore overseas markets.
The FingerPay fingerprint payment terminal is similar to the UnionPay POS machine. When the consumer makes a payment, the finger is pressed on the reading head of the terminal, and the consumption amount is automatically transferred from the customer's bank account to the merchant. Because the fingerprint information is unique and the fingerprint is identified by data, the fingerprint image is not collected, so that the entire process is safe and convenient, payment procedures can be completed within 5 seconds, and user privacy is not violated. In the Shanghai area, tens of thousands of merchants have been covered, with an average daily increase of tens of thousands of users.
Transformation from technology
The predecessor of Libaiqu is a professional fingerprint technology company, which has the world's leading fingerprint recognition technology with independent intellectual property rights, mainly serving military applications. The current Li Baiqu CEO Chen Xiaofeng was an angel investor at the time.
Chen Xiaofeng has always had a soft spot for biometrics. Everyone has a lot of media certification systems: business cards, ID cards, passports, various points cards. There are too many media, it is inconvenient to carry around, and once lost, counterfeit, it involves a lot of security issues.
Biometric technology can solve this problem. Biometric technology does not require any media for identity verification. In biometrics technology, fingerprint recognition has the highest degree of trust, and also has a certain degree of user recognition.
Unlike the traditional fingerprint image recognition technology used by fingerprint recognition devices such as access control and attendance, Libaiqu's living feature point fingerprint recognition technology is to extract several tiny feature points from each fingerprint and encrypt them with vectors It is converted into a set of fingerprint data information, and the data obtained every time is different. Finally, the internal logic relationship of the different sets of data is judged by the recognition algorithm, so as to recognize. If only the finger epidermis is slightly scratched and the dermis is not damaged, it can still be used normally.
In addition, FingerPay only recognizes fingerprints with vital signs, which means that even "finger breaking" is useless, not to mention counterfeiting. This greatly avoids the possibility of fingerprints being stolen or copied. It is an absolute leader in the international arena.
Thinking of Business Model: Integration of Finance and Biometrics
When Chen Xiaofeng invested in this company in early 2005, many people were not optimistic and thought it was not a big deal. For example, the PC application is used by everyone, and more than one person is replaced regularly; while the fingerprint application is mainly a safe, attendance box, and access control, a group of people use one, which is replaced irregularly. PC profits are thin and large, so it has developed into an industry, and fingerprint recognition has large profits, but small amounts.
After the investment, Chen Xiaofeng has been thinking, how to use everyone, like PC, more than one, regularly replaced?
In March and April of 2005, Chen Xiaofeng thought: "Is it okay to pay? Change its business model. It used to sell modules, now it produces products, and users pay for each use."
In the first half of 2005, Chen Xiaofeng bought the company to carry out restructuring work such as intellectual property divestiture and civil business transformation. In February 2006, Libaiqu was formally established.
After locating fingerprint payment, the first step is to transform the technology. There is a big difference between having fingerprint recognition technology and making a fingerprint payment platform. The former is just biometric technology, the latter is a combination of biometric technology and finance. Since 2006, Libaiqu has carried out all-round cooperation with many domestic and foreign commercial banks, well-known merchants and partners in various industries.
Three challenges of fingerprint payment: Can banks, merchants, and users accept it?
Chen Xiaofeng admitted that tapping the door of fingerprint payment is not easy, and involves three aspects: banks, merchants and users. The three are involved, and the merchant will ask you how many banks and how many users do you have? Users will ask, how many banks and merchants do you have? Banks have similar problems. "There is always one to start. In this, the breakthrough we choose is the bank."
"Now many online payments, including mobile payments, require users to 'move' bank money to another stored value account. Alipay is also the same. For consumers, unless your application is particularly trusted, otherwise, let users "Relocating" an account is still troublesome, so we chose to link directly to the bank. "
In Shanghai, Libaiqu began to cooperate with banks to conduct a fingerprint payment pilot in 2007. It was officially launched in 2010 after nearly three years of bank's almost demanding internal tests and restrictive trial operations.
At present, Libaiqu cooperates with banks including Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Bank of Communications, China Merchants Bank, China Everbright Bank, Minsheng Bank, Bank of Shanghai, etc. It is expected that in the first half of 2011, cooperation with Bank of China, Shanghai Pudong Development Bank, China CITIC Bank, etc. will be successively opened for finger-pay services.
"We will make a copy of a city after it has been thoroughly understood. It will be copied in other cities. It will not need to be docked and tested with banks like Shanghai. As long as the machine is in place, users can use it."
After the bank accepts, how to attract users to use?
"Users will feel very fresh when they hear the news of fingerprint payment, but will they go to get one right away? Not necessarily." Chen Xiaofeng asked himself, "Thinking coarsely, it's because fingerprint payment is not mature yet, thinking deeply, yes Attractiveness is not enough. "
Finger-Payment: the service industry hypermarket
"Now the payment industry is more concerned, but many people have overlooked one point: payment is not an end, but a means. Consumers do not pay to pay, but to get good products and services." He defined payment as a linked merchant And consumers. Connect the two together through payment methods.
Consumption is not a user's demand, but only a means to satisfy the user's needs. Good quality and low price are the real needs of the users. The ultimate goal of merchants is to make profits. "How do merchants attract users? On the one hand, good products, good services, and good promotion. The user's good quality and user's good products and services have been connected. The second aspect is whether cheap and good merchant promotion can be connected. . Facts prove that it can. "Seizing the user's real needs and gathering users with rich preferential services refers to the real vitality of Futong.
At the end of the 70s and the beginning of the 1980s, the main household expenses were bulk items. Under this background, the business models of Gome and Carrefour were generated. Through centralized purchases, the spread was earned, consumers received preferential treatment, and manufacturers opened up sales channels.
At present, B2C such as JD.com and Dangdang have made a change on this basis, transforming physical stores into online malls, but the business model has not fundamentally changed. Centralized procurement, logistics and warehousing have not changed.
As people's consumption habits change, service expenditures account for an increasing proportion. Service consumption cannot adopt the Gome and JD models because it requires specific places and specific service personnel. At this time, there was a group purchase.
"Group buying is already in the direction of the hypermarket of the service industry, but it has taken a half step. The concept of group buying is still centralized purchasing, but there are many problems with group buying. The fundamental reason is that users should pay first to the group buying website, not to pay. To merchants, this creates risks and encounters service discount issues. "
Group purchases realize bulk purchases through the handling of cash flow. The only drawback is that group purchases do not control the cash flow circulation network and have established a sporadic and simple network. The user gives the money to the group buying website, and the group buying website then pays the money to the merchant.
The business logic behind FingerPay is to develop a brand new, market-large service industry hypermarket that does not require inventory and logistics, relying on circulating cash flow. For example, FingerPay pays 100,000 to service providers in advance, purchases a certain discount qualification, and then provides users with the most favorable merchant discounts. This is equivalent to the opening of a large stored-value card, and all E-Pay users use this large card together to enjoy the discount without stored value.
"If you buy clothes, VIP will get 10% off. We buy out a certain amount of goods at a low discount in advance. If it refers to PayTone users, you can enjoy more discounts than VIP; if the mall is discounted, you can enjoy longer, Lower discount service. "Chen Xiaofeng example.
FingerPay is different from "group buying". The low discount of group buying websites does make it have a strong appeal, but due to its limited consumption, first payment, merchant consumption discrimination, peer competition and other factors, the user stickiness of group buying websites Not high, "The threshold for group buying websites is low, and competition is fierce. If there is not enough attractive activity support, a large number of users will flow to other websites at any time ..."
Chen Xiaofeng said: "Finger Pay also attracts users with strong discounts, but the fingerprint payment technology and operating threshold are very high. Our payment form is unique in Asia. In addition, we have a circulation of funds and pay a large amount in advance. The funds give merchants to reach a cooperation agreement, so users do not need to limit consumption, first payment and other restrictions, which is equivalent to 'group purchase' anytime, anywhere. "
This kind of innovation has no warehousing and no logistics in the financial cycle, but through cash flow cycle innovation, the hypermarket model is realized. After using finger to pay, it is equivalent to obtaining a hypermarket pass. Users can use it before paying. The only thing that users need to do is to become a finger-pay user: go to the bank to handle the finger-pay service for free.
The finger-pay plan, when Shanghai is fully penetrated, is quickly copied to other cities. Chen Xiaofeng expects that this time will be the end of 2011.
According to Chen Xiaofeng, there are no more than three fingerprint recognition technologies that can be used for fingerprint payment applications worldwide. Only Libai is the only one that really operates in the world.
The above information source "Venture Investment" is authorized by the China Venture Capital Research Institute (CVCRI) to publish it. All rights reserved. Please indicate the source when reprinting. For more information, please click download to view all articles.
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