A piece of news in the cross-border payment circle has attracted attention in the past two days. Two payment companies actually “fighted”.
Recently, the domestic cross-border payment company Hangzhou Ping Pong Intelligent Technology Co., Ltd. (hereinafter referred to as “PingPong”) filed a lawsuit against Shanghai Duojing Network Technology Co., Ltd. (hereinafter referred to as “Duojing”) and Shanghai Duohui Network Technology Co., Ltd. (hereinafter referred to as “Duohui”) to the Binjiang District People’s Court of Hangzhou City on the grounds of “commercial defamation dispute”.
A lawsuit triggered heated discussion in the market about the two companies. From a business perspective, there is a lot of overlap between the two.
Experts analyze that this court battle between leading companies in the industry is not only related to the business reputation and market share of both parties involved, but also reflects the pain points of homogeneous services and high compliance costs after competition in the cross-border payment industry has entered the deep water zone.
The industry believes that the boundaries of cross-border payment competition need to be regulated urgently.
Recently, a hearing announcement from the Binjiang District People’s Court of Hangzhou showed that PingPong sued the two companies Duojing and Duohui to the court on the grounds of “commercial defamation disputes.” The case is scheduled to be officially heard on September 19.
Looking at the business and layout of both parties, both are cross-border payment players.
Among them, PingPong is the leading company in the field of cross-border payment in China. It was founded in 2015. Its business covers more than 200 countries and regions. It has obtained 60+ global payment licenses and permits, and its license scope covers China, the United States, the European Union, the United Kingdom, Japan, Singapore, Indonesia, Malaysia, Australia, etc.
“There are currently 500,000 to 700,000 B-side sellers engaged in cross-border e-commerce business in China. They are typically small and medium-sized enterprises and have all encountered difficulties in cross-border payment collection.” PingPong
CEO Chen Yu once said that cross-border export issues are highly complex and involve various policies such as card organizations, acquirers, payment institutions, banks, and foreign exchange controls. The core that supports its global layout is that PingPong has a complete set of anti-money laundering and compliance systems; in China, PingPong also has the advantage of localization.
The two companies, Duohui and Duojing, were established in 2017 and 2020 respectively. They are affiliated enterprises, and their legal representatives are Deng Guobiao.
It is worth mentioning that Deng Guobiao is the founder and CEO of the cross-border payment platform XTransfer, and Duohui is also the operating entity of XTransfer.
According to the official website, XTransfer is headquartered in Shanghai and has obtained local payment licenses in Hong Kong, the United Kingdom, the United States, Canada, Australia, Singapore, and the Netherlands.
Just a few months ago, XTransfer announced that it had obtained China’s “Payment Business License”, and the entity behind the payment license was Shanghai Anxinhui Payment Co., Ltd.
This also means that XTransfer has made up for the shortcomings of payment licenses in the country.
XTransfer stated that it will continue to provide safe, compliant, convenient, fast, and low-cost global trade collection and payment services for more small, medium and micro foreign trade companies.
Relevant people said that it is not convenient to respond to the lawsuits between the two payment companies, and the specific situation will be determined after the verdict.
So, what are the causes of “commercial defamation disputes” involving payment companies?
What businesses are involved?
Professional lawyers said that there is a certain connection between the two in market competition, and the reason for choosing to go to court is mainly because the behavior of one party unfairly hinders the legitimate business activities of the other party and damages its legitimate rights and interests.
Judging from its business characteristics, commercial defamation mainly involves the creation and dissemination of false facts and false complaints that disparage competitors’ business reputation and product reputation, such as fund security and freezing risks.
Beijing Business Daily reporters reviewed the past litigation records of both parties and found that most of the litigation issues involved in the two parties were service contracts, labor contract disputes, etc. The commercial slander that occurred this time was relatively rare.
However, in March this year, Suzhou Cross-border Trading Co., Ltd. was also brought to court by PingPong, mainly because the articles published by the former on its WeChat public account constituted an infringement of PingPong’s reputation.
Payment companies are in court over business defamation disputes. According to the industry, the reason is still the fierce competition in the industry.
Nowadays, competition in the cross-border payment industry has entered deep water. On the one hand, competition among institutions has become increasingly fierce and difficult in obtaining licenses.
Countries have strict regulations on cross-border payments, and licenses have become the “hard currency” for compliance operations.
In order to gain a competitive advantage, many payment companies have joined in the “battle” for licenses.
On the other hand, business homogeneity among institutions is prominent.
For example, some cross-border payment companies have similar product functions and payment methods, making it difficult to form unique competitive advantages.
Amid fierce battles between multiple parties, the boundaries of competition within the industry have become increasingly blurred.
Su Xiaorui, a senior researcher at Suxi Zhiyan, said that compared with XTransfer, from the perspective of business characteristics, PingPong has more comprehensive service capabilities, covering B2B, B2C, service trade and other diverse scenarios. It has abundant cross-border payment license resources and is in cross-border e-commerce.
It has a first-mover advantage in the field of merchant payment collection, but in recent years it has also stepped up its efforts in the B2B market; while XTransfer was established slightly later than PingPong and is positioned to focus on B2B foreign trade, focusing on small, medium and micro enterprises, and has attracted many corporate customers with its vertical services and risk control capabilities.
However, it can be seen that there is a lot of overlap between the two businesses, and incremental customer expansion actions have been targeted at emerging markets such as Asia, Africa and Latin America, and there will be a close-quarters situation in the business competition.
Relevant legal disputes will also have a certain impact on the companies involved.
Talking about the impact of commercial defamation disputes on the organization’s business, the lawyer further analyzed that the commercial defamation lawsuits of relevant companies will directly increase their compliance costs and may affect the progress of the licenses they are applying for.
At present, the case has entered the pre-trial preparation stage. Key issues such as specific evidence of commercial defamation and determination of the responsibility of the companies involved will be gradually clarified during the trial on September 19.
In addition to this incident, the industry also pointed out that at a time when cross-border payment competition is becoming increasingly fierce, the litigation battles between leading companies and their peers are not only related to the business reputation and market share of the companies involved, but also reflect the competitive boundaries that the industry urgently needs to standardize in the rapid development.
From an industry perspective, against the background of policy support and encouragement and the deepening of the global economy, payment “going overseas” has become a new path for payment companies to seek diversified business growth poles.
On the one hand, cross-border payment rates are much higher than domestic ones, bringing huge profit potential; on the other hand, the pressure of domestic growth bottlenecks and the rise of digital payment demand in emerging markets such as Southeast Asia, the Middle East, and Africa have attracted the attention of “going overseas”.
Although the market is hot, pain points still exist, mainly due to high compliance costs. For example, global license applications need to be broken one by one, homogeneous rate wars squeeze profits, and cross-border risk control faces data islands and geographical risks.
“Leading companies have begun to use legal means to define the boundaries of competition.” Experts suggest that companies strengthen differentiated layouts, such as deepening license barriers, focusing on vertical scenario technology output, and promoting competition from reputation discredit to value creation.
In the fierce battle between multiple parties, the boundaries of competition need to be clarified.
Relevant payment institutions must first strengthen the internal management of their own employees/partners and avoid letting or even indulging employees, causing internal management to get out of control; second, they must focus on building product capabilities and business capabilities, defeat business opponents in an upright manner, and avoid damaging the fair competition environment in the industry through undesirable methods such as “pushing” and “malicious criticism.”
