Third Party Payments Licenses in China See Prices Contract Almost 60%

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Prices for third party payments license in China have seen a precipitous decline since Beijing’s launch of a crackdown on internet payments.

According to a report from Securities Daily China has seen a sharp decline in the number of payments license transactions as well as prices since the start of 2019.

As of 13 June only two third party payments licenses have been transacted since the start of the year, with industry sources reporting that prices have fallen by around 60% compared to their former peak.

“Just looking at the internet payments sector, payment license prices have slid from a peak of 800 – 900 million yuan to around 300 – 400 million yuan,” said one source.

“Prices for payments licenses are primarily based upon the business scope covered by the license, which includes the three areaof internet payments and mobile payments, acquiring business and prepaid cards,” said Chen Wen (陈文), vice-secretary of the Industry Finance Research Fund of the Chinese Academy of Social Sciences.

“Of these, the most valuable is internet payments and mobile payments.”

Official data indicates that the Chinese central bank issued 271 third party payments licenses during the period from 2011 to 2015, until it suspended issuance in 2016 as part of efforts to “optimise structure and improve quality.”

People’s Bank of China (PBOC) data further indicates that there are currently 238 enterprises in China that hold third party payments licenses, while the list of cancelled payments license holders has reached 33 in total.

Data from the Suning Financial Research Institute indicates that during the period from 2015 – 2018 over 40 companies in China purchased payments operations licenses from existing holders, with the total transaction sum exceeding 24 billion yuan.

Data from Paynews.net further indicates that payments license trading first began to take off in China in 2012 with a total of 2 transactions, before rising to 14 in 2015 and peaking at 24 in 2016.

Transaction numbers subsequently fell to 14 in 2017 and 2 in 2018.

As of 13 June 2019 there have been only two transactions involving payments licenses, including Manfield Chemical Holdings’ (万辉化工控股有限公司) plans to pay HKD790 million (approximately 690 million yuan) for a controlling stake in DaysPass (企业得仕股份) in March, and Qi Fenqian’s (七分钱) full acquisition of Beijing’s Yinxinlian (银信联(北京)支付有限公司) in June for around 25 million yuan.

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