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

by Terry X Xie 0

The People’s Bank of China recently announcedthe first 27 licensees of non-bank payment service providers inChina, out of the 32 that had passed the initial screening. Allnon-bank payment service providers in China are expected to obtaina license before September 1, 2011 or be forced to shut down theiroperations, so, it is widely believed that this is just the firstround of licenses. There are many more non-bank payment serviceproviders waiting in the line, including many prepaid cardcompanies covered in Mercator’s recent report: Prepaid Card Market in China 2010.

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

25 of these 27 companies obtained a license to operate on anation-wide basis, meaning that they have a registered capital ofCNY100 million (US$15.1 million). The other two (Beijing DigitalWang-Fu-Jing and Beijing UnionPay Merchant Services, bothsubsidiaries of China UnionPay) only applied for a license tooperate in Beijing with a registered capital of CNY30 million(US$4.5 m).

Alipay, which was at the center of dispute between its parentcompany Alibaba and Yahoo (a stake holder of Alibaba), alsoreceived a license. Yahoo has blamed Alibaba for transferringownership of Alipay to a group led by Jack Ma, Alibaba’s chiefexecutive. Yahoo has said that the move erodes its 43 percent stakein Alibaba, but Alibaba has said that the move was totally legaland necessary to obtain the license from the Central Bank. The twocompanies continue to discuss the issue hoping to find a solutionsoon. Central Bank didn’t explicitly prohibit foreign ownershipsfrom non-bank payment service providers, saying only that the issuewill be addressed later separately. But it is commonly believedthat having a foreign owner will significantly reduce thelikelihood of obtaining a license in the near future. If Alibabaand Yahoo fail to find a commonly acceptable solution, there is apossibility that Alipay’s license might be revoked. The scenario ishighly unlikely, however, as Alibaba will use all resourcesavailable 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, corebusinesses, and license coverage (services and geographic areas),together with more discussion of the impact of this development onthe overall market and the competitive landscape within will beprovided 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
• Chinabank Payment
• Hainan Xinsheng Information Technologies
• Smartpay
• La-Ka-La Network Technologies
• Shanghai Fu-Fei-Tong Information Services