Comparative Study On Legal Digital Currency And Third-party Payment (example).doc

Special topic on literature information on comparative research on legal digital currency and third-party payment: reference sample of "Financial Information" in "Finance or Securities". Attributes: Doc-, doc format, text 5140 words. Excellent quality, affordable price, welcome to download! Applicable: As a reference copy for content writing, it can solve related tasks such as how to write, correct writing format, content extraction, etc. Content text Comparative study of legal digital currency and third-party payment to take the initiative. In order to promote currency circulation and maintain the stability of the current financial system, our country is actively carrying out forward-looking research on digital renminbi and has now entered the DCEP pilot work, which will have a great impact on digital currency. The currency and third-party payment industries are undergoing irreversible reshuffling and restructuring. This article compares the differences between legal digital currency and third-party payment in terms of theoretical basis, payment process and deposit process, and explores the possible impact of legal digital currency on third-party payment from a technical and theoretical level. Introduction In the wave of digitalization sweeping the world and against the background of the continuous development of industry informatization, the adoption of digital currency has become a general trend. After overcoming regulatory obstacles, cryptocurrencies will eventually replace cash and become the core force driving the development of the digital economy. The People's Bank of my country launched digital currency research as early as 2014, and launched internal pilot work in 5 pilot areas in 2019... This is not only a change in currency form, but also a change between major currencies. nation. The battle for the initiative to build a digital financial system. In 2020, the scope of my country's digital RMB pilot will continue to expand, with application scenarios mainly covering retail, catering services, transportation, wage payment and other fields.

After the implementation of digital renminbi, there is no doubt that it will have a serious impact on existing industries, and the third-party payment industry will be the first to bear the brunt. Since my country's digital currency is currently positioned to not pay interest and only replace M0, and third-party payment tools have replaced most cash payments, this phenomenon has intensified the competition between legal digital currencies and third-party payments in terms of payment. experience. . Will central bank digital currency replace third-party payment platforms such as WeChat and Alipay? As long as the government does not intervene, how many people will abandon the current third-party payment platform and choose to use DCEP for transactions? In response to these issues, this article will compare legal digital currency and third-party payment from three aspects: theoretical basis, payment process and deposit process. Literature Review on the Development of Legal Digital Currency Yao Qian (2018) proposed that the idea of ​​digital currency originated from early cryptographers thinking about whether cash in hand could be transferred from one end to the other like an encrypted and signed email [1]. With the application of blockchain technology, digital currency came into being. Private digital currencies represented by Bitcoin and Dogecoin have broken away from the form of tangible currency, but so far, they are more like digital securities assets. Wu Jinwang (2021) still proposed from a dialectical perspective that the reason behind the popularity of non-sovereign digital currencies is not only the public’s high-level concerns about existing banknotes and third-party payments, but also concerns about the monopoly situation caused by non-sovereign digital currencies. Centralized form [2]. Regarding the characteristics and operating mechanism of legal digital currency, Ji Xiaonan and Chen Shan (2021) pointed out that legal digital currency has an organic combination of centralized issuance management, technical architecture, decentralization, and controllability. , currency value stability and other characteristics [3].

In addition, Liu Chuan et al. (2021) also proposed that “using sovereign credit as credit endorsement makes legal digital currencies naturally have the characteristics of convenience, efficiency, and stable currency value” [4]. From the perspective of operating mechanism, the issuance and circulation system of legal digital currency is a key component of a country’s financial system [5]. There are two theoretical models: one is the "central bank-public" RMB issuance model, where the public opens accounts directly with the central bank, and the central bank directly issues digital currency to the public without going through commercial banks and the public. Fully responsible for the operation of legal digital currency. The second is to adopt a dual model of "central bank-commercial bank-public", with the central bank facing commercial banks. Commercial banks are entrusted by the central bank to provide legal digital currency deposit and withdrawal services to the public, and cooperate with the central bank to maintain the normal operation of the legal digital currency issuance and circulation system [6]. The issuance and non-circulation mechanism adopted by my country’s digital RMB is a binary model. The non-traditional cash issuance process is basically the same, while retaining the infrastructure of commercial banks and minimizing the impact of the legal digital currency system on the existing systems of commercial banks. . Furthermore, Ba Shusong et al. (2020) also proposed that our digital currency has three characteristics: First, it adopts a “one currency, two repositories, and three centers” architecture; Second, it adopts “front-end voluntary, back-end real-name” supervision; It focuses on traditional monetary policy Failure via smart contracts [7]. Fiat digital currency can make up for the shortcomings of third-party payments and the differences between the two. Zhang Xiaochen (2019) proposed that “legal digital currency is conducive to improving settlement efficiency.” At present, the completion of online transactions on the Internet involves multiple entities such as central banks, commercial banks, and third-party payment platforms. Each entity has its own independent system and database. Transactions involve multiple layers of clearing and non-settlement, consuming a lot of social resources, and legal digital currencies based on peer-to-peer transactions can eliminate intermediate links [8].

Mu Jie (2020) believes that although third-party payment platforms have gradually separated Internet transactions from traditional finance, third-party payment platforms issue bank deposit currencies and convert them into legal tender at a ratio of 11, which will increase financial risks. Inconsistency between institutional and monetary systems. Stable, and the issuance of legal digital currency can meet people's safe and convenient payment needs and can also reduce dependence on third-party payment platforms [9]. Furthermore, Guo Yan et al. (2020) proposed that the function of legal digital currency as a currency execution transaction medium is different from existing third-party payment tools. With unlimited legal compensation and full payment scenario coverage[10]. Wu Tingting and Wang Junpeng (2020) compared the differences between the central bank's DCEP and Alipay and Tenpay in terms of legal validity, security, settlement methods, privacy protection, offline payments, etc., and concluded that the legal digital currency for third-party payments is mainly reflected in Conclusions on payment business, sales business, and credit reporting business[11]. Comparative analysis of the theoretical basis of legal digital currency and third-party payment. Comparison of legal digital currency and third-party payment. Legal digital currency is the digitization of the RMB. It only replaces cash in circulation, has unlimited legal compensation, and falls under the category of M0. Third-party payment is an online payment model in which a reputable and powerful independent institution acts as an intermediary to solve the problem of information asymmetry between the parties to the transaction and promote the normal conduct of transactions. The funds that the public deposits into third-party payment platforms for daily recharge, withdrawal, and payment needs are called customer reserves. Its essence is the monetary funds received in advance by the third-party payment machine, which belongs to the M1 category.

With the rapid growth in the number of third-party payment users and transaction volume, customer reserve funds are deposited on third-party payment platforms, forming a huge amount of accumulated funds. In order to alleviate the pressure and risks caused by large-scale precipitated funds, Yu'ebao monetary funds such as Lingqiantong and Lingqiantong came into being. The fund falls under the M2 category. Therefore, the currency attributes of third-party payment belong to the M1 and M2 levels. Comparison of the payment process between legal digital currency and third-party payment Payment is the window closest to cash. When using third-party payment offline, transactions between users only need to scan the QR code to complete the fund transfer. The platform’s clearing system and financial system will process each payment transaction in real time. This is the core competitiveness of the third-party payment industry to develop the platform economy, and the network externalities of the platform economy are constantly attracting new users. The emergence of phenomenal products represented by WeChat and Alipay has set off a new wave. Payment wave. In 2020, China Construction Bank briefly opened legal digital currency DCEP accounts for ordinary users in pilot areas. To open an account, you need to enter the "Digital Currency" interface of CCB App and provide basic information such as name, ID, mobile phone number, bank card number, etc. After success, you can see basic functions such as payment, collection, transfer, and scanning QR codes. However, it is not difficult to see that the payment business of digital renminbi overlaps with third-party payment, and is mainly concentrated in retail, small-amount, and high-concurrency application scenarios, and is inferior to third-party payment in terms of performance. Comparative advantages in safety, convenience, service fees, etc. (1) Non-offline payment. In terms of acting as an intermediary, legal digital currencies rely heavily on the digital currency system of commercial banks. The legal digital currency system is only responsible for the secondary verification and changes of information. This binary payment system endorsed by national credit is more secure and reliable.

For third-party payment platforms, the entire payment process relies more on its own fund processing platform, financial system, payment settlement system, accounting center, etc. On the one hand, in this platform model, funds are deposited into third-party payment institutions. -The payment platform side intensifies the credit risk of the platform itself; on the other hand, the third-party payment platform acts as a credit intermediary and provides guarantees for both parties to the transaction, but ignores the security risks of corporate credit itself. (2)Offline payment. Offline payment on third-party payment platforms is the evolution of non-offline payment. It requires the payee to be online and use other devices, such as smart watches, facial recognition payment vending machines, etc. The former adds additional functionality to the offline payment process. One step to bind the device in advance is to use facial recognition to replace the payment code in the process. Regardless of the form, there are limitations to transaction scenarios, and legal digital currency can perfectly avoid such problems. First, it supports payers and payees to complete payments offline. The payer encrypts the transaction information with a personal key and then transmits the encrypted information to the payee via NFC. Since the transaction information has been encrypted using Key signature, there is no need to worry about the payee lying about the transaction. You only need to wait for the payee to connect to the Internet, and the legal digital currency system will process the transaction information. Secondly, the payer is not required to prepare and bind additional offline payment equipment in advance, nor is the payee required to update the payment method. The interaction only requires the payment devices of both parties to be close to each other to complete the interaction. It can be seen that legal digital currencies have enriched payment scenarios and met the public’s expectations for safe, effective, anonymous, and convenient payments.

(3) Prevent double flowering. Third-party payment serves as the only intermediary, recording every account in real time, and centrally managing data; fiat digital currency has not yet clarified the solution among the published profit-making technologies, but it may be possible. Refer to the mature technologies of blockchain, such as UTXO mode (), timestamp and other technologies, or improve the legal system and strengthen financial supervision to effectively avoid malicious operations. (4) Balance payment limit. Third-party payment limits are automatically calculated based on the user's daily payment amount and payment scenarios, and the annual cumulative payment limit is up to 200,000 yuan; legal digital currency divides digital wallets into four categories, and users can receive an annual payment of 300,000 yuan after opening an account. For the cumulative payment limit, you can apply for a first-level wallet at the counter according to your personal needs. Raising the upper limit can better meet users' personalized and diversified payment needs. Comparison of the recharge process of legal digital currency and third-party payment. For third-party payments, deposits are withdrawals. When the payment instruction is sent to the platform clearing system, the platform will automatically deduct % of the withdrawal amount as the withdrawal fee. Withdrawal rates have been a subject of public controversy. In order to alleviate the controversy, both Alipay and WeChat launched the activity of "paying for points, and points redeemed for free cash withdrawals". Digital RMB is non-profit and pursues the maximization of social benefits and social welfare. The central bank will establish a free digital renminbi value transfer system and financial infrastructure, and will not charge exchange and circulation service fees to the issuing layer. Commercial banks will not charge individual customers redemption and redemption service fees for digital renminbi [12].

In terms of saving transaction costs, legal digital currencies have unparalleled natural advantages. Judging from the final destination of the currency, the funds flowed into the commercial bank corresponding to the deposit account. Judging from the nature of fund transfer, third-party payment withdrawal is to transfer the funds stranded on the platform to personal accounts of commercial banks through bank access methods such as Netlink and UnionPay. This is a transfer between two commercial entities; digital currency fiat withdrawal is to deposit the personal digital currency wallet balance into the digital currency deposit account of the corresponding commercial bank, which is relatively similar to the traditional deposit and withdrawal business of commercial banks. Generally speaking, deposits of legal digital currency do not need to be deposited in a third-party payment platform, but business transactions are conducted directly with commercial banks. Bypassing the third-party payment platform during the transaction process can reduce the possibility of personal information, consumption preferences and other privacy being stolen. The results of the comparative analysis are based on the comparison between legal digital currency and third-party payment in terms of payment process, recharge process, etc. It is not difficult to find that legal digital currency is superior to third-party payment in terms of payment process, deposit process, etc. The following two aspects: Security first, legal digital currency is based on national credit, and third-party payment relies on the commercial credit of the platform. Secondly, although high concurrency is an insurmountable problem with current blockchain technology, legal digital currency will use the blockchain's asymmetric encryption algorithm in terms of key confidentiality and prevention of double spending.

标签： #Currency #Payments #Third Party #Digital #Fiat