Huawei has become the latest in a long list of Chinese tech companies to obtain a license for payments operations via the acquisition of another firm, with analysts pointing to the possibility that the company is setting the foundations for a foray into the finance sector.
Huawei has become the 100% owner of Shenzhen Shi Xunlian Zhifu Wangluo Co., Ltd. (Shenzhen Municipal Xunlian Smart Payment Web Co., Ltd.) (深圳市讯联智付网络有限公司) according to recent changes to industrial and commercial information.
Xunlian Zhifu was first established in June 2013, and acquired a payments license in July 2014 to conduct nationwide online payments and mobile payments operations.
The payments operator was originally a subsidiary of ZTE Software (中兴软件), who sold it to Shanghai Worui’ou (上海沃芮欧) in 2016 for 385 million yuan.
While Huawei has remained mum about how much it paid to acquire Xunlian Zhifu, sources said to domestic media that the consideration fell short of 700 million yuan.
Domestic analysts say that Huawei paid a reasonable price for Xunlian Zhifu, but that most third party payments platforms have been performing poorly on the back of tighter regulation and poor profits, leading to a sharp decline in prices for licenses over recent years.
The acquisition of a payments license by Huawei is not unexpected given that the tech giant has previously made forays into related operations in recent years.
In July 2020 Huawei added a “Vendor Payments Receipts” (商家收) mobile function to its digital wallet, while in September of the same year it teamed up with China CITIC Bank to launch a joint credit card.
Analysts further point out that the acquisition of Xunlian will give Huawei access to its vendors, users and payments system, and potentially lay the foundation for further expansion into the Chinese finance sector.