Chapter 2 Literature Review

2.1 The Definition of the third-party payment

Third-party payment is an independent agency with strength and credit Guarantee, it act as intermediation in the transaction process under the supervision of banks and business management departments, provides secure guarantee and technological support to the two trading parties. It has signed a contract with each big bank and appoints to deal with bank payment and settle system interface platform of online payment. In the "third party payment" model, after the buyer the choose and buy goods by using a third-party platform for payment, they will notify the seller to request shipment; when the buyer has received the goods, and inspect the export goods are confirmed, you can inform the third party payment to the seller, the third party then transfer the payment to the seller account. Third-party payment as the main means of network transactions and credit intermediary play an important role in establishing a connection between the online stores and Banks and making the online shopping safer.

2.1.1 The Emergences of the third-party payment

As a separate operating agency, the third party payment platform, acting as intermediation in the process of dealing under the supervision of banks and business management departments, provides secure guarantee and technological support to the two trading parties. The platform, also acting as witness and channel of the network transaction, offers abundant payment means and reliable service to Customers decreases the possibility of fraudulent trade and relieves public worries on the security of network transaction. The platform of third party payment was investment hotspot of the year 2005, which is called "on-line payment year". Due to relaxed qualification cognizance, small payment companies sprang up and the scale of platform increased by 100percent a year. According to I Research’s investigation, the third party payment in 2004 is 2.3billion RMB, while the number was more than 30 billion RMB in 2006 and with an expectation of 280 billion RMB in 2010.