Payment license trading: The highest bid is 3 billion yuan, and Internet payment is in great demand

Recently, a piece of information about the transfer of a third-party payment license has been widely circulated in the circle of friends of industry insiders. The transfer price of the license is 870 million yuan, and the business scope includes Internet payment, mobile phone payment, bank card collection, etc. The license period is before 2021, and the transferor sells and transfers 100% of the equity.

The reporter's investigation found that based on previous transactions in the industry, the above transfer price was not outrageously high.

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"A license covering five businesses can be bid up to 3 billion yuan at the highest, and the fair price is at least over 1.2 billion yuan. Whether it is Internet payment, mobile phone card payment, or bank acquiring business, as long as the business covers the whole country, a single business license can be as high as 700 million yuan, and the fair value is more than 400 million yuan. Of course, the price of the license alone is not worth that much money. The payment license itself with its own business and market will be more valuable." Zheng Changhuai, a researcher at the Internet Lending Eye, told the Securities Daily reporter.

In the era of mobile Internet, China's mobile payment level leads the world and shocks people at home and abroad. Against this background, the price of third-party payment licenses, which represent "passes", has also soared, and the speed of increase is astonishing.

According to data released by the central bank, third-party payment institutions processed 163.9 billion online payment transactions in 2016, with a total amount of 58 trillion yuan, up 99.5% and 87% year-on-year respectively. In 2017, the scale of third-party payment transactions is expected to exceed 100 trillion yuan.

"It's growing too fast and the price is too high, so small businesses don't even dare to think about buying a license," a company leader told reporters, lamenting that he had wanted to sell it, but was discouraged by the skyrocketing prices.

Scarcity

License plate prices have increased by 80% in two years

In August 2016, the central bank made it clear that "in principle, no new payment institutions will be approved for a period of time," further highlighting the scarcity of licenses.

At the beginning of 2018, the central bank announced the renewal results of the fifth batch of non-bank payment institutions' "Payment Business Licenses", of which 21 institutions successfully renewed, and 4 payment institutions failed to renew. So far, after five rounds of payment license renewals, the central bank has cancelled a total of 28 payment licenses, leaving 243 payment licenses. Industry insiders said that the rectification of payment institutions is still ongoing, and the reshuffle and integration of the third-party payment market will be inevitable.

Against the backdrop of tightening licensing regulations and frequent fines, increasingly scarce payment licenses have become increasingly popular.

According to statistics from Zero One Finance and Zero One Think Tank, a total of 14 payment companies were acquired in 2016. Internet companies have been acquiring payment licenses through mergers and acquisitions, and the prices of payment licenses have naturally risen.

Zheng Changhuai gave reporters a rough estimate based on several acquisition cases, "From 2016 to 2018, the price of payment licenses has increased by more than 80% year-on-year."

At the same time, a reporter from Securities Daily found in their investigation that most acquirers were listed companies and Internet companies.

Wang Xiaoting, co-founder of Jieyue, said, "Compared with traditional industry giants, these companies have huge traffic and scenario advantages. Obtaining licenses can derive their main business into Internet finance and direct payment to other financial formats, which can expand the company's business scope and help connect various business nodes to form a closed business loop."

In recent years, listed companies have also been very enthusiastic about acquiring payment licenses.

Wang Haimei, a researcher at the Internet Lending Home, told reporters that there are two main reasons why listed companies acquire third-party payment licenses: first, the central bank has made it clear that in principle it will no longer approve the establishment of new institutions in the short term, so listed companies can only enter the payment market through acquisition; second, third-party payment licenses are relatively valuable. With the rapid development of Internet finance and changes in people's payment habits, third-party payment licenses can not only help listed companies reduce cost pressures, but also record a large amount of user consumption behavior data, which has a high data value.

Prepaid card business is yesterday’s news

Internet payment is the most valuable

According to the classification of the "Administrative Measures for Payment Services of Non-financial Institutions" issued by the central bank on June 21, 2010, third-party payment services are mainly divided into three categories: online payment, issuance and acceptance of prepaid cards, and bank card acquiring. Online payment includes Internet payment, mobile phone payment, fixed-line payment, digital TV payment, etc.

Xu Xiaomei, an analyst at Zero One Finance, told the reporter: "Generally speaking, the more payment licenses a payment company has, the higher its value is. The price can range from tens of millions to tens of billions of yuan."

According to an investigation by a reporter from Securities Daily, the price of a license mainly depends on its business scope, and not all payment licenses have high valuations.

"Payment licenses cannot be generalized. The most valuable ones are Internet payment, mobile phone payment, and bank card acquiring. Affected by mobile payments such as Alipay and WeChat, the least valuable is fixed-line payment," an industry insider told our reporter.

In addition, after the rise of mobile payment in recent years, the consumer experience advantage of prepaid cards no longer exists, and prepaid cards are currently in an awkward situation of being gradually eroded and replaced by mobile payment. With the continuous tightening of supervision, the dividends of the prepaid card market have receded, and the awkward market situation has also made it difficult for prepaid card business licenses to have room for speculation or appreciation.

"So far, three payment companies with prepaid card business qualifications have chosen to 'abandon' the prepaid card market instead of being acquired, which also reflects that the prepaid card license is not popular in the market and its value is not ideal," said Huang Shiqiao, CEO of Touzijia, to the Securities Daily reporter. He also believes that "at present, licenses with Internet payment and bank card acquiring business qualifications are in great demand, and their prices are rising year by year; while the price of prepaid card issuance and acceptance business licenses is relatively low."

Xu Xiaomei also believes that the most sought-after payment license should be the "Internet payment" license. In the Internet era, payment is a platform and entrance, and the data and traffic behind it are the objects of competition among Internet companies. She also pointed out: "Comparatively speaking, the price of the 'prepaid card issuance and pre-acceptance' payment business is relatively low. In recent years, the central bank has tightened its supervision of third-party payments, and many companies with 'prepaid card issuance and acceptance' payment businesses have been punished or even had their licenses revoked. The main reason is that prepaid card violations are relatively serious."

Data from the "China Third-Party Payment Comprehensive Payment Market Quarterly Monitoring Report Q3 2017" released by iResearch shows that the combined comprehensive payment market share of Alipay, Tencent Finance and UnionPay Business reached 81.84%.

"The 28 effect in the payment market is becoming increasingly obvious, and an oligopolistic situation is gradually forming. Independently developed small payment institutions will have little room for development. In the future, these small payment companies may use their own license advantages to cooperate with large companies with sufficient customer or scenario resources through equity cooperation or other means, or seek a place through better payment experience and product innovation," said Wang Haimei.

"In the future, the payment industry will inevitably face a reshuffle, and companies are adjusting their businesses and seeking new breakthroughs. Of course, some payment institutions are bound to get into trouble, and selling licenses at a high price is the best option," said Zheng Changhuai.