(Chinese Version)

Recently, the Chinese e-payment market witnesses a growing trend to transfer e-payment license. The price of a e-payment license for all services has reached a staggering $75 million. According to insiders, the price has risen by ten times. In other words, the same license could be bought with only $7.5 million.

It is reported that a e-payment license for conducting only e-payment services across China is priced at $15 million to $30 million, while a license for conducting all kinds of services across China is priced at $30 million to $45 million. On any account, $75 million is too high a price for such a license.

The apple in the eye

It is only since last year that e-payment license became the apple in the eye. On August, 12th, China Central Bank announced a list of 28 e-payment platforms that could continue to conduct e-payment business, including Alipay, Unipay, Tenpay and 99Bill, etc.

As a matter of fact, from May, 2011 to March, 3rd, 2015, China Central Bank had already e-payment license to 270 e-payment platforms in eight batches. Among them, three platforms’ license were withdrawn by China Central Bank due to their misdeeds. That is to say, 267 Chinese e-payment platforms now still hold the license. Since March, however, 2015, China Central Bank has stopped to give license to other platforms.

However, 267 is too small a number for the burgeoning Chinese e-payment market. According to industry pundits, although the license itself won’t bring any concrete benefit to e-payment platforms, it is vital for the long-term development of e-payment platforms.

Liu Qing, CEO of WRZT, a financial investment platform, told South China Weekly once:

Every time China Central Bank is to issue new license, seven to eight, even ten companies would rush to bid for it. Few companies dare to ask for bargains, fearing that other companies would get the license instead.

According to some analysts, the price of license is so high not only because the supply is a lot lower than demand, but also because many platforms are not sure if they could survive in the future due to the tightening government regulations, so they want to get a license as backup. When things really get worse, they could just sell the license at a higher price.

What makes a license so expensive?

However, it seems that China Central Bank don’t allow e-payment platforms to directly sell the license to other platforms. So how exactly can the license become so valuable?

After some research, I find that e-payment license is usually transferred through share acquisition, that is, backdoor transfer.

China Central Bank does allow platforms with strong capital, rich resources, advanced technology, the sense of obeying the law and development prospect to expedite development through merger and acquisition.

A while ago, Evergrande acquired JFZ with $85.5 million, and Wanda also acquired 99Bill. In fact, since JD took the lead and got its license through acquisition, over thirty other companies, including Xiaomi, Ping’an, and Haier, have got their license through acquisition.

An intermediate broker of the business once told National Business Daily that:

Different companies have different offers, yet they are basically at the same level. These companies are more like “shells” with no debt at all.

“Intermediary agencies sell different kinds of licenses at a price ranging from $39 million to $67 million. They also charge another $4.5million or $6 million for their service,” Liu Qing added.

Although the price of e-payment license is soaring, it doesn’t guarantee that a company doesn’t need to worry about anything. Xue Hongyan, a senior researcher at Suning Finance Institute, told Beijing Business Daily that the Chinese e-payment market is increasingly become monopolized. In the future, there would be less than twenty e-payment companies, among which less than ten companies could provide third-party e-payment service.

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[The article is published and edited with authorization from the author @YMCJ, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.