(Yicai Global) Nov. 22 -- Bilibili has secured a coveted third-party payments license in China by acquiring a 65.5 percent stake in Yoyi Electronic Payment for CNY118 million (USD18.5 million).

The move aims to reduce the Chinese video-streaming and mobile gaming company’s reliance on third-party payment services and to meet regulatory requirements, Ningbo Public Resources Trading Center said on Nov. 19.

Set up in 2011, Yoyipay’s original controller was the state assets manager of Yuyao city in eastern Zhejiang province and it is the only Ningbo-based firm with a payments business license. Yoyipay will need to renew the five-year permit next June, according to the rules.

Internet companies invest in payment businesses to cut dependence on third-party payment operators and reduce costs, an industry insider told Yicai Global. Bilibili paid CNY10.8 million (USD1.7 million), CNY26.8 million, and CNY42 million in service fees from 2018 to last year, as users buy virtual goods and value-added services on the platform through third-party payments.

But others believe the main reason why internet companies acquire licensed firms is to comply with regulatory requirements. “It can cost more for Bilibili to operate a payments service, as it does not have the cost advantages of [Tencent Holdings’] WeChat and [Ant Group’s] Alipay,” an industry analyst said.

Despite many internet and tech companies, including Xiaomi, Meituan, Vipshop Holdings, Gome Retail Holdings, Didi Chuxing, Trip.Com, Pinduoduo, and Huawei Technology, having launched their own payment services, Alipay and WeChat still dominate the Chinese market.

Separately today, Bilibili’s Hong Kong-listed shares [HKG: 9626] fell 10.5 percent to close at HKD564 (USD72.38) apiece. The stock began to slump on Nov. 18, despite Bilibili reporting its best-ever quarterly revenue the previous day, as its net loss widened 144 percent. Trading in the shares was halted on Nov. 19 pending an announcement on the pricing of its proposed sale of convertible preferred notes.

Editor: Futura Costaglione