Extraordinary Genius

Payment software? Kirilenko is puzzled. Don’t we have online banking now? Why should we develop payment software? Sell it to the banks?

Feng Yu saw the confusion on Kirilenko’s face and explained it. “Brother Ki, our eCommerce website has two forms of payment, right? One type is payment first before the supplier ships out the item, and the other is paid upon receiving the goods, right?”

“That’s right. One is through bank transfer, and the other is cash. What have these got to do with the payment software?”

“This payment software is called a third-party payment platform, which is also called a credit intermediary. Look at our current mode of payments. The customer can reject the goods if they select cash upon receiving the goods. We will incur losses on transportation. It will also create a stockpile of goods. We have no choice but to use this mode to attract and build trust with the customers.”

“If the customer is using bank transfer, and the product they received is different from what they bought, they cannot reject the item. The other party had received the money, and what can you do? It will be too troublesome to request for refunds, and the customer will feel cheated.”

“At this time, there must be a third-party payment platform, which is the software we are going to develop. The buyer will pay us first, and we will notify the seller to ship out the product. When the buyer received the product and confirmed it, we will release the seller’s payment. This way, we will form protection for both parties.”

“If the buyer thinks the product has a problem, they can raise a complaint, and the website will verify it. The payment has not been released to the seller, and it’s easier for the buyer to get refunds. There will not be issues where the seller refuses to make refunds. The buyer will be protected and increases our website’s creditability. Also, it can replace the cash payment upon receiving the goods. This will prevent the wastage of transportation costs. The buyer must return the goods before they can get a refund. This will prevent unnecessary losses for the seller.”

Kirilenko understood what Feng Yu was talking about and asked. “Why will others believe you? Being the credit intermediary needs to provide guarantee and must have a good credit track record for people to trust you.”

Feng Yu points to Kirilenko and himself. “We are the trust. We will be the guarantor for our third-party payment software. With our assets, the customers will trust us as we will not cheat their money. Also, even if their money were cheated, we can afford to compensate them.”

“We will become the guarantor?” Kirilenko had not thought about this. But what Feng Yu said is true. No one will think that Feng and he will cheat the customers of that small amount. The current number of users is still low. Even if there are a million transactions a day, and each transaction is worth 1,000 USD, that is only 1 billion. Either one of them can easily afford that.

“Wait… Feng, will those banks agree?” Kirilenko asked.

“We have to discuss with the banks. We are providing a guarantee for the customers and not taking a cent of profits. Also, this will increase transactions. Why will they reject?”

“Wait… we are not taking any profits from that? If we are going to be the guarantor, we must put in a sum of money. The development of the software and the running cost is not a small amount. If we are not getting any profits from it, we are wasting our money!” Kirilenko looks at Feng Yu as if Feng Yu is an idiot.

“No… no… no… we will not suffer any losses. Instead, we can use this software to make more money. Once this software is developed, the profits from it might even be higher than our eCommerce website.”

“Let me give you a simple example. Look at the banks. When you open a savings account with the bank, the bank will keep your money safe and give periodic interests. Of course, the bank will not suffer any losses, as they will use your money to give out loans, investments, etc.”

“But the most important factor of all these is the transactions. No matter if you deposit or make any withdrawals, there will be transactions. These transactions are where all the profits come from.”

Kirilenko is confused. His financial knowledge is too limited compared to Feng Yu. He understood what Feng Yu said initially, but when Feng Yu said the profits come from the transactions, he got confused.

How can there be profits from the transaction records? That is only a record. Is that so valuable? If it is a fake accounting transaction, it might be valuable for some people. Still, the majority of people are not doing any fake accounting. What profit is Feng Yu talking about?

“Do you know about the Credit Score in the US? How do they determine one’s credit score? Through the person’s bank transactions! Your savings, outflows, debts, inflows, repayment of debts, etc. Do you understand this?”

Kirilenko nodded and then shook his head. He knew about Credit Score, but he still doesn’t understand how they will make money from the transaction information?

Feng Yu patiently explained. “From your monthly inflows, I can determine your income, and from your monthly outflows, I can predict your consumer attitude. Your transactions will also tell me what you are working on and what sort of items you like to buy. All these require Big Data Analysis, and what we want from the analysis is the consumer’s habits.”

“Through your transactions, I will know your spending habits, and I will have an advantage when it comes to advertising for you. I can show you the advertisements that you will be interested in. Right?”

Kirilenko nodded. What Feng Yu said is true. He loves to drink, and the businessmen who seek his cooperation will treat him to a drink and offer him alcohol, which he had not tasted before.

In Feng Yu’s previous life, many people will notice the advertisements on Tabao are related to their previous purchases. Even the advertisements on other online shopping websites are the same. This is because these websites are using the same third-party payment software.

The data collected from the third-party payment software is valuable for both buyers and sellers.

“Also, we can know which product is more popular through these transactions, and we can increase the production of those products and lower our costs.”

This is why there are so many popular products on the internet in Feng Yu’s previous life. Without the support of Big Data, who will know which product will be popular and who dares to produce them in large volumes? With the third-party payment software, one will know which product will be popular.

Kirilenko said excitedly. “This means we can increase the customer’s spending on our website, right? This is a good thing!”

Feng Yu: “……”

You can only think of increasing customers’ spending? Don’t you consider working with those production factories on producing those popular products? You can also profit by selling this information to them!

Translator’s notes:

Credit history