By Chen Guojing
As the payment market supervision is stricter, general license quantity control is adopted, and the third party payment license becomes a kind of scarce resources. Through merger, a number of companies compete for payment license and are willing to build closed loop and form complete online and offline layout. Under this background, the concentration ratio will be improved in a further step as well.
A few days ago, Shenzhen KeyBridge Communications Co., Ltd., a listed company, announced that the company intended to the price of RMB 945 million yuan in cash to buy 45 percent equity of Shanghai JF Payment Data Service Co., Ltd. Upon the completion of subscription, the company will become the first large shareholder of JF holding the nationwide trade business payment license.
This was not the first merger of third party payment license. Previously, the merger of the third payment company "qiandai.com" by Meituan Comments also attracted the wide attention. In this September, Xinli Finance purchases license of 100 percent equity of Haike Financing, a national payment license.
According to incomplete statistics in 2016 Payment and Settlement Business Operation Report of China, more than 30 mergers or financing cases have happened since JD mergers the E-bank in 2012, and there were more than 20 cases in 2015. The figure continues to rise this year.
Merger becoming a shortcut of license acquisition
The popularity of third party payment license of these companies is outsourced from that the third-party payment of license can't separately complete sale and quantity is limited, so the equity acquisition becomes a shortcut to obtain licenses.
Since May 2011, People's Bank of China has approved the third party payment license of 270 enterprises. Later on, the licenses of three companies were revoked for serious violations. Currently, there are 267 payment licenses on the market.
On August 12 this year, the Central Bank published the extension of the first batch 27 payment licenses. Meanwhile, in order to regulate the payment market, the Central Bank proposed the principles of "general quantity control, structural optimization, quality improvement and orderly development", and indicated that it would not approve or set any institutions in a certain period. The institutions with capital ability, resource advantage, technical ability, compliance consciousness and development prospect will be under the support to achieve rapid achievement through merger and reorganization. The behaviors profiteering the payment business license will be forbidden strictly. It means that the only one complied way to acquire the license for carrying the payment business is merger and reorganization.
In the meanwhile, the development and expansion trend of E-commerce, the third party industry will develop rapidly. According to the statistics, the third party payment market trading scale has kept an annual average increase speed above 50 percent since 2009.
According to the insiders, the third party payment license is a "standard configuration" of an internet company, more likely an "infrastructure" connecting various business of each business. Thus, the license becomes the "sweet pastry" on the market. Although the price purchasing the licensing enterprise is always rising, many internet companies speed up their steps to acquire a license.
The intention being to build "closed-loop"
As introduced by the insides, the fee reform measures related to order acquisition business make the rate more marketized, but the only payment service cannot make a considerable profit, which makes the payment agency find cooperation.
Previously, as the regulated in Notice on Improving the Pricing Mechanism of Charges on Swiping Card issued by National Development and Reform Commission and Central Bank, for the service charge in order acquisition links with severe competition, the current government guiding price is changed into market adjustment price, and the specific rate shall be confirmed by the acquirer and commercial tenant through negotiations. This charge reform measure has come into effect since September 6.
Related experts think that the mainstream profit model for payment agency is order acquisition, it is in close relation with the scale of payment scale, and the payment institutions with larger scale will acquire higher profits. However, it is hard for most payment agencies to make a profit due to limited scale.
It will cost much for a large network company with stable users to pay the commission, so if a payment agency is purchased, it will really benefit. Of course, it is not their main goal, but to create a complete closed loop of "commercial operation - scene building - payment completed" by acquiring the third party payment license.
This commercial strategy has been evidenced by the hot "double-11 festival". More and more enterprises expect to achieve the complete online & offline layout through "Network+", and the payment is considered as the key hereinto. The third party payment license is attractive because an enterprise possessing the payment license could create its user real-name system, form its capital closed loop and further deposit heavy transaction data and learn about user's transaction habits whereby, which is quite important for the future development of the enterprise.
Further intensified competition
As the payment market supervision is stricter, the insiders think that future competition will be intensified and the concentration ratio of industry is expected to be further improved.
Recently, the payment agencies are requested to return to the original channel as per the Methods of Managing Online Payment Business for non-banking Payment Institutions published by the central Bank. Previously, the Central Bank revoked the license of three payment agencies, namely, Zhejiang EASE, Guangdong Yimin, Shanghai Changgou, and wrote out a "fine" to several payment agencies. This may "reshuffle" the payment industry, and the "savage growth age" in the past is over.
Actually, it is not efficacious forever by acquisition and reorganization to acquire the third party payment license. The Central Bank will renew the payment license every five years. At that time, the Central Bank will also review the compliance of payment business, as well sustainable capacity, etc.
Many people argue that future third-party payment will improve its intensity under the stricter supervision tendency. Moreover, some insiders predict, in view of industrial competition situation, the online payment enterprises with independent viability may be not over 20 in the future; while with the further intensifying industrial competition, the third-payment card issuing enterprise with sustainable development capacity may be not more than 10.