Two companies canceled their payment licenses, accelerating the reshuffle of the third-party payment industry
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Recently, the list of canceled licensed payment institutions updated on the official website of the People’s Bank of China shows that the payment license of Shenzhen UnionPay Financial Network Co., Ltd. (“Shenzhen UnionPay Financial Network”) will be officially canceled on January 10, 2024. This is the second payment license canceled by the central bank this year after Shanghai Newsstar Technology Co., Ltd. (referred to as “Shanghai Newsstar”) lost its license. Data show that since the issuance of the first batch of third-party payment licenses in 2011, as of press time of the Economic Information Daily reporter, the central bank has canceled a total of 86 payment licenses. Industry experts said that in the future, the payment industry will still take compliance as its bottom line, and it needs to use its own resources to enter the payment segment and win the market with word of mouth.
Public information shows that Shenzhen UnionPay Financial Network was established in 1996 and is 100% controlled by UnionPay Commerce Co., Ltd. (referred to as “UnionPay Commerce”). It has a registered capital of 100 million yuan and obtained a payment license in 2011. Regarding the cancellation of the Shenzhen UnionPay financial network payment license, the relevant person in charge of UnionPay Commerce stated that after the official promulgation of the Regulations on the Supervision and Administration of Non-bank Payment Institutions (referred to as the “Regulations”), UnionPay Commerce actively responded to regulatory requirements, complied with laws and regulations, and accelerated development. Integration work of subordinate holding payment institutions. “The original payment license business type held by Shenzhen UnionPay Financial Network is bank card acquiring, and its business coverage is Guangdong Province.” The person in charge pointed out that the Shenzhen branch will rely on the full license payment business qualification of UnionPay Business to better serve the local area. Clients are provided with a variety of comprehensive payment and information technology services.
Some insiders pointed out that UnionPay Commerce’s move was a decision made to further comply with regulations. According to the Regulations, the same actual controller shall not control two or more non-bank payment institutions of the same business type. In recent years, many payment licenses under UnionPay Business have been transferred or canceled to meet new regulatory requirements.
Previously, on March 20, the list of canceled licensed institutions updated on the official website of the People’s Bank of China showed that Shanghai Newstar’s payment license was cancelled. This was also the first payment license to be canceled this year. According to the official website of the People’s Bank of China, Shanghai Newstar obtained the “Payment Business License” for the first time in December 2011 and was allowed to carry out prepaid card issuance and acceptance business in Shanghai. In December 2021, Shanghai Newstar successfully passed the renewal of its payment license, and the validity period was extended to December 21, 2026. However, Shanghai Newstar took the initiative to apply for cancellation of its payment license on September 30, 2023.
However, the above-mentioned industry insiders believe that the cancellation of Shanghai Newstar’s payment license may be related to its poor performance, operating violations, etc. The financial report shows that as of the end of 2021, Shanghai Newsstar’s total assets were 8.2736 million yuan and net assets were 5.3692 million yuan; the net profit in 2021 was -1.5472 million yuan. It is worth mentioning that in August 2017, Newsstar was fined 30,000 yuan for violating payment business regulations. It is understood that Shanghai Newsstar once put 100% of its shares on the market for transfer at a price of only 6.8028 million yuan, but no one took interest.
“Nowadays, online point-based membership cards, vouchers and other similar ‘prepaid card’ businesses are emerging, and the original advantageous position of prepaid cards is facing challenges. If it cannot be transformed in time, it will be difficult to adapt to the current market situation.” According to analysis by industry experts, currently only prepaid cards are included Payment licenses for card issuance and acceptance are indeed difficult to monetize. On the one hand, in the past, most prepaid card institutions mainly relied on the interest on reserve funds to make profits. After the reserve funds were centralized, this “money path” was basically cut off. On the other hand, the strengthening of tax policy supervision has also led to a sharp decline in the sales of multi-purpose prepaid cards.
In recent years, my country’s third-party payment license industry is accelerating reshuffle. Data disclosed by the central bank show that a total of 15 payment licenses will be canceled in 2023. Counting from the issuance of the first batch of third-party payment licenses in May 2011, the central bank has issued a total of 271 payment licenses in the past 10 years. So far, the central bank has canceled a total of 86 payment licenses (more than 80% of which include prepaid card qualifications), and has retained 185 third-party payment licenses.
“Affected by mobile payments, many prepaid card institutions have not been operating smoothly and have fallen into profit difficulties. In addition, the implementation of tax reforms such as replacing business tax with value-added tax has affected the business promotion process of prepaid cards. In addition, there are also market institutions Failure to do an orderly clearing process, resulting in running away and losing contact, not only triggers various risk events, but also dampens the enthusiasm of consumers to participate.” said the above-mentioned industry experts.
However, according to Su Xiaorui, a senior consultant in the financial industry analyzed by Analysys, future payment license renewals will generally remain stable. “It needs to be emphasized that payment, as one of the basic businesses in the financial field, will not change its value due to the withdrawal of institutions and the survival of the fittest in the industry. In the future, the payment industry will still take compliance as the bottom line and serve small and micro merchants with high quality. For the purpose of consumers, we use our own resources to enter the payment segment and win the market with word of mouth.” Su Xiaorui said.
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