Mercator Perspectives

Who Has a Lead In the Payment Service Provider Market in China?

The People’s Bank of China recently announced the first 27 licensees of non-bank payment service providers in China, out of the 32 that had passed the initial screening. All non-bank payment service providers in China are expected to obtain a license before September 1, 2011 or be forced to shut down their operations, so, it is widely believed that this is just the first round of licenses. There are many more non-bank payment service providers waiting in the line, including many prepaid card companies covered in Mercator’s recent report: Prepaid Card Market in China 2010.

The vast majority of these 27 companies provide online payment services that are also available through other channels (mobile phone and telephone). There are also a few that provide card payment services to the merchant. Others are mostly prepaid card companies. This list is not a complete list of the leading players in the payment service market in China, but it does include SOME of the largest players in the area of online payments, mobile payments, merchant services, and prepaid.

25 of these 27 companies obtained a license to operate on a nation-wide basis, meaning that they have a registered capital of CNY100 million (US$15.1 million). The other two (Beijing Digital Wang-Fu-Jing and Beijing UnionPay Merchant Services, both subsidiaries of China UnionPay) only applied for a license to operate in Beijing with a registered capital of CNY30 million (US$4.5 m).

Alipay, which was at the center of dispute between its parent company Alibaba and Yahoo (a stake holder of Alibaba), also received a license. Yahoo has blamed Alibaba for transferring ownership of Alipay to a group led by Jack Ma, Alibaba’s chief executive. Yahoo has said that the move erodes its 43 percent stake in Alibaba, but Alibaba has said that the move was totally legal and necessary to obtain the license from the Central Bank. The two companies continue to discuss the issue hoping to find a solution soon. Central Bank didn’t explicitly prohibit foreign ownerships from non-bank payment service providers, saying only that the issue will be addressed later separately. But it is commonly believed that having a foreign owner will significantly reduce the likelihood of obtaining a license in the near future. If Alibaba and Yahoo fail to find a commonly acceptable solution, there is a possibility that Alipay’s license might be revoked. The scenario is highly unlikely, however, as Alibaba will use all resources available to avoid that from happening.

Here is a list of the names of the 27 companies currently licensed. A complete list of the companies, their background, core businesses, and license coverage (services and geographic areas), together with more discussion of the impact of this development on the overall market and the competitive landscape within will be provided in an upcoming Mercator research viewpoint.

• Alipay
• China UnionPay Merchant Services
• Beijing Shang-Fu-Tong Network Technologies
• TenPay
• Allinpay
• Kai-Lian-Tong Network Technologies
• YeePay
• 99Bill
• ChinaPNR
• ShengPay
• KDMoney
• EasyPay
• Kuai-Fu-Tong
• ChinaPay
• Beijing Digital Wangfujing Technology
• Beijing UnionPay Merchant Services
• Sand Backcard-Link Information & Service
• Fuka
• Bo-Hai-Yi-Sheng Business Services
• Yinsheng E-Pay
• IPS
• Chinabank Payment
• Hainan Xinsheng Information Technologies
• Smartpay
• La-Ka-La Network Technologies
• Shanghai Fu-Fei-Tong Information Services
• EKA

 

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