What Powers Third‑Party Payments? A 15‑Figure Deep Dive into Architecture & Flow

1. Overview of Third‑Party Payments

Third‑party payment institutions are non‑bank entities that have obtained a payment business licence from the People’s Bank of China, such as WeChat Pay, Alipay, and Huifu Tianxia. They provide various collection and payment solutions for merchants, mini‑programs, H5, and apps.

2. Product Architecture

The typical system includes cash registers, payment products, routing, channels, core payment, accounting core, clearing core, risk‑control core, and merchant onboarding.

2.1 Access Layer

Direct interface for users, merchants, and channel partners, offering consumption payment products, merchant payment capabilities, and management platforms for channel partners.

2.2 Business Layer

Payment products for different scenarios: travel, utility payments, card payments, compliance, split‑payment, merchant settlement, etc.

2.3 Transaction Layer

Handles incoming transaction requests such as collection, payment, and authentication.

2.4 Payment Processing Layer

Provides cash‑register functions and core processing for quick payment, gateway payment, split‑payment, etc.

2.5 Risk‑Control Layer

Manages security of user credit, transaction, payment, and data.

2.6 Channel/Partner Layer

Aggregates various payment channels (financial institutions, banks, clearing houses) and routes transactions to the optimal channel.

3. Five Core Business Processes

The five core processes are collection, payment, refund, clearing, and settlement, which together enable the large‑scale service platform of third‑party payment institutions.

3.1 Collection Process

Includes wallet payment, quick payment, gateway payment. The flow has four stages: online transaction, accounting and split‑profit, channel clearing, and merchant settlement.

3.2 Payment Process

Funds are disbursed from the reserve account to merchants, third‑party payers, or users. Strict controls ensure debit before credit and limit re‑payment risks.

3.3 Refund Process

Supports original‑route refunds and reverse‑payment refunds, with verification against the original transaction and balance adjustments.

3.4 Clearing Process

Involves settlement with payment channels and internal settlement among merchants, partners, and fees.

3.5 Settlement Process

Transfers pre‑collected transaction funds to merchants’ bank accounts. Various settlement products (T+1, D+1, D0, S0) are supported, each with specific logic.

4. Reserve‑Fund Centralized Custody and Management

Reserve funds are the pre‑collected monies that payment institutions must fully deposit into a dedicated account at a custodian bank. After “direct‑connect” termination, these funds are centrally stored at the People’s Bank of China.

4.1 Centralized Custody Model

The institution accesses the clearing network (e.g., NetUnion) to manage its reserve‑fund account, query balances, and allocate quota.

4.2 Quota Mapping Management

Institutions submit mapping requests to the clearing network; approval depends on available balance after subtracting already mapped quota.

4.3 Reserve‑Fund Change Notification

At settlement time, the clearing network sends settlement instructions to the centralized account and notifies the institution of balance and quota changes.

4.4 Balance Query

Institutions can query balance, mapped quota, and available quota via tools provided by the clearing network.

4.5 Management Platform

A backend tool is needed to view balances, mapped and available quotas, and to adjust mapping amounts.