Study On Valuation Method Of Third Party Payment

The payment system is the foundation of whole financial system which provides the accounts clearing and accounts settlement service for the whole society, it facilitates the effective cash flow and cash transaction in the economy. With the development of the e-commerce and e-payment, increasing number of payment transaction is correlated with the small transaction amount from more geographically dispersed and scattered online transactors, however financial institutions did not provide the online buyer and seller with the trustworthy platform on which to trade, the third party payment service provider was under such circumstances conceived to complement the loophole existing in the international payment system.The third party payment service has entered into an epoch of rapid growth, the total number of such providers have reached300as in2010. As the market expansion of the whole financial system and the third party provider is officially sanctioned by the financial watchdogs, this service is highly regarded as a promising future. Merger and acquisition are commonplace in the market as the competition intensifies, and such trend is likely to persist in the following years. Valuation on these payment providers is essential for them to go floating, or be acquired. However, third party payment service is a burgeoning business and no definite valuation methodology has been legitimately approved, therefore, the right choice of valuation approach for this new payment service is imperative issue to be tackled. This paper aims to address such issue in a way to explore some relatively scientific and practical methods for third party valuation.The structure of paper is as following:Chapter1:Introduction. This chapter gives a holistic view on the research background and its significance, research methodology and basic framework, and some innovative perspective.Chapter2:Summary’. Because the third party payment service is a relatively new industry, there is no research on its valuation method, but third party payment service can be aggregated into the online service, therefore, the valuation approach for other online companies can hopefully provide some insight to the valuation of third party payment providers. This chapter will shed some light on the research on some valuation methods used by both domestic and international online companies, and some perceptions on these research results are briefly made.Chapter3:The theoretical analysis of valuation method on third party payment companies. This chapter first taps into various corporate valuation theories then delves into the current operation of third party providers and identifies the main characteristics of the third party service providers, finally analyzing the external factors which can possibly have an impact on the corporate valuation. This chapter lay out the path for the comparison of wide arrays of valuation methods in the proceeding chapter.Chapter4:Explore valuation methods for third party payment companies—the improved Price/Sales method. This chapter is the one important chapter for this paper. To start with, the author analyses the different current corporate valuation methods while considering the characteristics of the third party payment service provider and makes the conclusion that Price/Sales method is the most suitable method for the corporate valuation on third party payment service provider.Then the author compromises the shortfalls of Price/Sales method by the induction of Synthetically Fuzzy Evaluation Model and Analytic Hierarchy Process. Finally the author looks into extensive use of the market approach in china’s economy, and tries to put improved Price/Sales method into the application of market approach.Chapter5:Application of the improved Price/Sales method in Paypal Company. Author evaluates Paypal by using the improved Price/Sales method in this paper. The case study further reinforces the interpretation on Price/Sales method by showing its practical application on a real company, provides a lens for the readers to better understand the usefulness. In addition, by comparing the result of different valuation methods, it’s more ostensibly to show the advantages and feasibility of the Price/Sales method.Chapter6:Results of research and suggestions. This chapter summaries the research, makes conclusions and make a morsel suggestions as to the practical applications of results. And the following also lists some of the drawbacks of this research.The main contribution of the paper(1) As for the deficiency of Price/Sales method, the author uses the Synthetically Fuzzy Evaluation Model and Analytic Hierarchy Process to make the improvements. The improved Price/Sales method standardize the analysis process and transform the quantitative analysis on value ratio to qualitative analysis, therefore improves the efficacy of Price/Sales method in the corporate valuation. Additionally, the integration of Synthetically Fuzzy Evaluation Model and Analytic Hierarchy Process into the whole market approach extends the spectrum of valuation methods and provides the new direction for further analysis.(2) This paper presents the characteristics of the payment service companies, and makes the comparison between different valuation methods with regard to these characteristics, and concludes that the Price/Sales ratio is the most practical corporate valuation methods for third party payment service provider.