China's Internet Payment License Prices Are Geyser to USD92.3 Million

China's Internet Payment License Prices Are Geyser to USD92.3 Million

Liao Shumin

Date: Wed, 09/20/2017 - 17:21 / source:Yicai
China's Internet Payment License Prices Are Geyser to USD92.3 Million
China's Internet Payment License Prices Are Geyser to USD92.3 Million

(Yicai Global) Sept. 20 -- A paucity has driven the price of a third-party payment license in the Chinese market to over USD150 million (CNY1 billion), the state-run China.org.cn reported.

Thus far, 24 payment institutions’ third-party payment business licenses have been cancelled due to serious breaches of payment regulations, mergers, non-renewals and for other reasons. Only 247 third party payment licenses now remain from the 271 that issued.

The People’s Bank of China (PBOC), China’s central bank, issued a total of 271 third-party payment licenses from May 2011 to March 2015. As more licenses issued, the third-party payment sector underwent rapid development, but after problems such as custody, clearing and settlement and secondary settlements came to light one after another, regulators began to rectify these problems. In the four renewals from August last year to date, some 24 payment licenses have been revoked. Currently, 247 licenses remain. 

Domestic third-party payment license business categories include single or multiple services for bank card acceptances, internet payments, mobile phone payments, fixed telephone payments and prepaid card issuances and acceptances. Among these, the most valuable are mobile payment licenses, bank card acceptance licenses and internet payment licenses.

"In the payment license categories, the value of a mobile phone payment license is getting lower and there is no large increase in bank card acceptance licenses, but there is huge speculation in internet payment licenses. In general, a regional bank card acceptance license is worth about CNY200 million to CNY300 million, a nationwide bank card acceptance license is worth about CNY500 million, an internet payment license is worth about CNY600 million, an internet payment + mobile payment license is priced at least at more than CNY800 million and a full-payment license is priced starting from CNY1 billion on up to CNY2 billion or more, a payment license intermediary told Yicai Global. 

As the central bank made clear its principle that it will no longer approve the establishment of new payment institutions for a stated time and will gradually intensify correction in the sector and the number of payment licenses available correspondingly continues to decrease, a tableau in which only big players compete to buy third party-payment licenses will become the norm.

Since JD.com Inc. [NASDAQ:JD] bought out a Beijing-based leading online payment firm in October 2012 up until now, some 31 payment licenses have been acquired and 19 issued since last year with the highest purchase price over CNY3 billion. Also, many third-party payment institutions are on track to be acquired, statistics from 01caijing.com show.

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Keywords: Internet payment license, bank card acceptance license, mobile payment license, Acquisition