YeePay Co-Founder & President Chen Yu: Web2.0 Payment Marching to Web3.0

Recently, at Global Payment in Web 3, a sub-forum of the Hong Kong Web3 Festival 2023, YeePay Co-Founder & President Chen Yu delivered a keynote speech titled Web2.0 Payment Marching to Web3.0.

In his speech, Mr. Yu proposed the following core views:

• Web1 is read-only, Web2 is read-write, and Web3 features genuine data ownership. From this perspective, Web3 is an autonomous countermeasure to surveillance capitalism, allowing us to regain data sovereignty.
• The true significance of Web3 is that it creates a great, Renaissance-like mechanism, allowing creators to declare sovereignty over memes, cultural genes, and creative ideas. Web3 started a new era of meme economy, which some refer to as the creator economy or creative economy. In Web3, the confirmation and exchange of value are the most vital link. Here, payment plays a key role.
• Web3 payments face two primary challenges: compliance and a lack of use cases. The world of Web3 needs an efficient compliance framework.

Here’s the full speech by Mr. Chen Yu:

Hello everyone, my name is Chen Yu, and I’m delighted to talk to you about Web3 in Hong Kong. Many Web3 professionals are very young. YeePay has been around for 20 years, which is not much younger than many of my Web3 peers. Today, I’d like to share my experience and views about Web3 from the perspective of Web2.

First, let us briefly talk about YeePay. YeePay.com was founded in 2003 and is one of the first Chinese third-party payment service providers to acquire the Payment License from the People’s Bank of China. We help our corporate users achieve business growth and digital transformation by providing secure, efficient, and smart transaction services. Aiming to become a leading digital transaction service provider, YeePay handles transactions worth about three trillion yuan every year.

Speaking of payments, let’s not forget the big picture of payments and Web3. In Web3, the metaverse is frequently mentioned. A lot of times when we talk about the metaverse or the Internet, we focus on front-end social networking and entertainment, and things like VR/AR that are sensational, sexy, and cool. But for payment service providers, the Internet and the metaverse are not just about social networking and entertainment. They are more about transactions. The way we see it, the value of both the Internet and the metaverse lies in exchange and confirmation, rather than simply display.

If we think of the Internet and the metaverse as transaction platforms, payment becomes a crucial process because it is the most essential channel for value exchange; payment is a strategic link. From the context of the whole marketing cycle, users see ads; they find eye-catching examples and clues in games and entertainment; they click, follow, and add products to the shopping cart; finally, they make payments to conclude the whole process.

Payment is of strategic importance in the whole ecosystem. That said, what is the greatest value of Web3? In fact, Web3 is all about data sovereignty. We often say that Web1 is read-only, Web2 is read-write, and Web3 features genuine data ownership. Data is widely regarded as the oil of the 21st century. It is the asset of each individual user. In the Web2 era, personal data and individual privacy is controlled by big platforms. In the Internet era, user data is exploitable, which turns us into commodities. From this perspective, Web3 is a countermeasure to surveillance capitalism, allowing us to regain data sovereignty.

In the Internet age, the term “meme” has gained traction, and the so-called Internet economy is essentially the meme economy. Human beings carry biological genes, as well as cultural genes. On the Internet, especially in the field of entertainment and social networking, we see various phenomena that are generated by the spread and copy of memes. Influencers, for example, disseminate and create memes, and they do this with ease. In the Web1 era, users were mostly meme consumers, and most creative and cultural genes were generated by big platforms. In Web2, we are all meme producers and consumers, but we do not fully own our creativity and memes. Web3, on the other hand, brings data sovereignty, allowing us to become meme owners and own our creative, cultural, and ideological genes.

Before the Renaissance, most artists remained anonymous and did not sign their work. They were regarded merely as creators and craftsmen, rather than true artists. It was not until the likes of Michelangelo and da Vinci began signing their artworks that they truly asserted sovereignty over their artistic creations and memes, which marks the beginning of the Renaissance. In this sense, the true significance of Web3 is that it creates a great, Renaissance-like mechanism, allowing creators to declare sovereignty over memes, cultural genes, and creative ideas. Web3 has started a new era of meme economy, which some refer to as the creator economy or creative economy. In Web3, the confirmation and exchange of value are the most vital link. Here, payment plays a key role.

In Web2.0, payment is a complex ecosystem involving many intermediaries that include issuers, acquirers, and gateways. This hierarchical, centralized architecture leads to low transaction efficiency and expensive costs. This is especially true for cross-border payments involving multiple financial institutions, geopolitical factors, and complex regulatory environments with AML, counter-terrorism, and KYC requirements, resulting in high transaction costs.

In Web3.0, decentralization has eliminated many of these intermediaries, turning user identity, cash flow, and capital flow into a unified process. In many Web3 scenarios, transactions are settled in real time, and business processes are better integrated via the adoption of smart contracts, which is impossible in Web2. Although this sounds perfect in theory, we are still far from this utopia in reality. Web3 transactions need to be effectively connected with wallets that are based on card associations, banks, and traditional user accounts in Web2. This represents a huge market gap and brings great opportunities for on-ramp/off-ramp service providers. In today’s Web3 ecosystem, many players now focus on the on-ramp/off-ramp business.

We have noticed two primary challenges in the field of Web3 payments. The first challenge arises from compliance. In Web3, there are plenty of fundamentalists who despise compliance and advocate full decentralization. This stance has led to many risk events, which has made us realize that Web3 also needs an efficient compliance framework. This conclusion is based on our experience in Web2, where many payment companies and institutions are operating under tight regulatory oversight.

The second challenge is that the world of Web3 payments lacks practical use cases, which is also why YeePay, a Web2 payment company, can bring value to the table. We have already introduced many use cases in the real economy and traditional industries.

I’ll focus on three aspects:

First of all, we will bring our expertise in compliance to Web3. As a payment company that has been running for 20 years, YeePay boasts extensive compliance experience in Web2 payment, an industry subject to regulatory scrutiny. We were one of the first to obtain the Payment License from the People’s Bank of China, and later we became the first company to acquire the cross-border payment license from the State Administration of Foreign Exchange. Of course, we are well aware that upgrading from Web2 to Web3 presents many compliance challenges. In a decentralized, intermediary-free world, where everything is done with decentralization or even anonymity, it is challenging for regulatory authorities to determine where to start and what to focus on. Today, technology represents the only way to tackle new problems caused by technology. From a regulatory standpoint, we need to embrace emerging technologies to address new challenges brought by oversight.

Second point, we bring Web2 value to Web3 through the use cases we created for the real economy and traditional industries. YeePay focuses on providing payment solutions for companies and merchants. We have delivered payment solutions that are seamlessly integrated with the backend processes to vertical industries, including aviation, tourism, hotels, e-commerce, retail, cross-border, Web3, non-tax government revenue, and education. We have been deeply involved in the aviation industry for many years. In fact, if you flew from China’s mainland to Hong Kong to attend this event, you might have used YeePay’s payment system in the backend. This is just one example of the many use cases we built for traditional sectors.

Earlier, we heard how China’s NFT, metaverse, and digital collection market boomed across the board in 2022. In reality, the real use cases of NFTs and digital collectibles must be combined with the real economy, but many traditional companies lack the technological capabilities to achieve that. Therefore, we have developed a SaaS system to help traditional IP owners and brands issue, mint, and operate Non-fungible Rights (NFR), providing them with a Web3 implementation platform.

As a licensed cross-border settlement agency, we provide settlement channels for cross-border e-commerce and foreign trade. Affected by geopolitical impacts, cross-border export businesses are facing challenges, but we also see many new opportunities. For example, we have turned China’s cultural, creative products into NFTs and released them in overseas markets, but compliant cross-border settlement channels are still needed if settlements are completed in China. This will bring many fresh opportunities. Overall, during our 20 years of experience in the payment industry, we have created practical use cases for the real economy and traditional sectors, and have leveraged Web3’s virtual economy to empower real-life economic growth. The massive application scenarios represent our value as a Web2 payment service provider.

Third, our 20 years of business experience in the world of Web2 promise great value for Web3. Here at YeePay, we often joke that we have gone from the SARS outbreak to the COVID-19 pandemic, and with a transaction volume of 30 trillion yuan annually, we have accumulated extensive operating experiences. Payment services differ from social and entertainment services because we are managing other people’s money, and every transaction is crucial. As such, requirements relating to reliability, availability, security, anti-money laundering, and KYC compliance are extremely strict, with demanding entry barriers. Over the years, YeePay has built up expertise in running large-scale payment services, and we can bring a lot of value to the Web3 world.

To sum up, we believe that a payment service provider from Web2 can bring three significant values to Web3: 1) compliance expertise, 2) uses cases in the real economy and traditional industries, and 3) rich operating experience. We are confident that as it migrates from Web2 to Web3, the whole payment ecosystem will present plenty of opportunities, and we expect to work with our Web3 peers to create new possibilities. Many of you are Web3 practitioners, and I hope that we could explore the Web3 world through more extensive exchanges in the future. Thank you!