How can small and medium sized Payment institutions move forward under the burden of license shrinkage and frequent violations



In 2021, the third-party payment industry is still under heavy load. On April 5, Beijing business daily made incomplete statistics according to the data disclosed on the central bank’s official website. So far, the central bank has cancelled 39 payment licenses, and only 232 have been approved. Compared with the reduction in the number of licenses, the number of tickets received by payment institutions is still high. Since the beginning of this year, the central bank has disclosed at least 14 tickets with the amount of 86.83 million yuan confiscated.

In the view of industry insiders, at present, the punishment of regulatory agencies for violations is increasing, the living space of some small and medium-sized Payment institutions is squeezed, and the license value is declining. In the future, payment business can continue to combine with the scene and form synergy with ecology. In addition, it can expand from payment to subdivision services and carry out diversified business.

39 licenses cancelled

Third party payment licenses continue to shrink. On April 1, the official website of the central bank disclosed Shanxi Jinhu Information Service Co., Ltd. (hereinafter referred to as “Shanxi Jinhu”), the first payment license cancelled since 2021, which is also the 39th company whose payment license has been cancelled disclosed by the central bank.

According to the information, Shanxi Jinhu obtained the payment license issued by the central bank in July 2013. Its business type is the issuance and acceptance of prepaid cards, covering Shanxi Province. In July 2018, Shanxi Jinhu completed the first renewal, and the license is valid until July 2023. However, on February 26, 2021, Shanxi Jinhu took the initiative to apply for cancellation of payment license.

For the industry, it is not surprising that payment institutions take the initiative to cancel their payment licenses. As a matter of fact, among the organizations that have cancelled the license recently announced by the central bank, the license for issuing and accepting prepaid cards has become a big “cancellation” account. At present, with the convenience of mobile payment, the payment experience of prepaid card has lost its advantages. Most of the industry believe that the value of prepaid card business without business ecology as a support has declined significantly.

In fact, license cancellation is a microcosm of the difficult survival of small and medium-sized Payment institutions in recent years. Beijing Business Daily reporter noted that in addition to the “abandonment” of prepaid card issuance and acceptance business licenses, six bank card acquiring licenses and five Internet payment licenses have also been cancelled. Among them, some Payment institutions were cancelled by the central bank in accordance with the law due to a large number of serious violations such as misappropriation of customer provisions, falsification of financial books and business statements, disturbing the order of the payment service market; some Payment institutions failed to renew their licenses due to repeated violations of relevant management regulations such as non-financial institution payment and bank card acquiring business.

“In recent years, the rapid development of the payment industry has also brought chaos. Since 2015, the central bank has strictly controlled the market access of Payment institutions, and introduced provisions, classified supervision and other measures. We should encourage the merger and reorganization of existing institutions, maintain sustainable development, and improve the market exit mechanism. ” Yu Baicheng, President of zero one research institute, pointed out that after 2016, the central bank suspended the issuance of new payment licenses. In terms of license renewal, for example, institutions that have not substantially carried out payment business in the duration, have stopped carrying out payment business continuously for a long time, and have great potential risks do not meet the conditions for renewal, so the number of payment licenses continues to decline.

Wang Pengbo, a senior analyst in the financial industry, pointed out three reasons for the license shrinkage. First, the market has been relatively stable after the early reshuffle of the industry. In the case that the main business scenarios have been covered, the institutions with slow business layout will be gradually cleared. Second, under the background of mutual fund regulation, the profits of some Payment institutions have shrunk greatly, because the new incremental pillar industries have not yet completed Third, offline acquiring companies are facing fierce competition from emerging institutions such as aggregate payment. Wang Pengbo believes that at present, the overall profit margin of the payment industry is low, and the follow-up license should be reduced.

Su Xiaorui, a financial technology expert, said that it is a general trend for payment licenses to continue to shrink. On the one hand, with the tightening of regulatory policies, a number of institutions with defects in compliance have been eliminated; on the other hand, with the aggravation of Matthew effect in the third-party payment market, some institutions with dim prospects and difficulties in operation actively choose to give up business and withdraw from the market, and it is expected that the subsequent shrinkage will continue continued.

However, in January 2021, the people’s Bank of China issued the “Regulations on non bank payment institutions (Draft)”, which specifies the terms of new institutions. In the view of the industry, after the implementation of the regulations, the approval of payment license is expected to reopen. However, in general, the market access and management in the field of payment will be strengthened.

Top 14 tickets

According to the disclosure of the central bank, there are still 232 payment licenses approved by the central bank so far. However, under the pressure of operation and stricter supervision, the in-service Payment institutions can be described as “moving forward with a heavy load”.

Since the beginning of 2021, the number of fines issued by the central bank for payment institutions has reached 14, including 1 million yuan and 3 million yuan, with a total amount of 86.83 million yuan. Among them, Guotong Xingyi was fined more than 69.71 million yuan by the central bank for 12 illegal behaviors, such as trading with unidentified customers, imperfect risk control system of barcode payment business, failure to carry out risk monitoring of acquiring transactions as required, and failure to deposit customer reserves as required.

In addition to the high amount of tickets, the trend of “double penalties” is becoming more and more obvious. Beijing Business Daily reporter noted that among the 14 tickets, 8 involved the punishment of responsible employees, most of which involved the poor anti money laundering behaviors such as failing to perform the obligation of customer identification and keeping the customer’s identity information as required.

Beijing Business Daily reporter learned from many parties that payment institutions have been punished more than ever, which is in line with market expectations. In the view of the industry, at present, the red line of payment business mainly involves anti money laundering and management regulations of acquiring business, and the most common problems are code, clearing and cash out.

Under Matthew effect, Payment institutions have a long way to go in compliance. In Su Xiaorui’s view, institutions should first standardize the system, such as formulating a special risk management system for high-risk transactions to strengthen the management of partners; in addition, they need to optimize the compliance management structure, introduce professional talents in the field of compliance, deeply study and study the latest compliance requirements; they should refine and implement various measures according to the system, such as establishing payment transaction style Finally, we should be alert to various red lines, and institutions should not misappropriate settlement funds. If we find suspicious transactions, money laundering, fraud and other risk events, we need to take immediate measures; if we find suspected crimes, we should report to the public security organ in time.

Looking for “big tree”

On the other hand, many Payment institutions are also waiting for an opportunity to break through. Some analysts said that it is a good way to seek strong shareholder merger and acquisition.

After pinduoduo, Ctrip, byte beat and other Internet giants acquired payment licenses, another payment company, xunlian Zhifu, changed its equity at the end of March. Huawei acquired 100% of xunlian Zhifu’s equity. That is to say, Huawei obtained payment licenses through acquisition.

“Payment business is very important for ecological Internet giants. Based on the high-frequency and financial attributes of payment, its commercial value, data value and user value are very high, and it has become the standard configuration of each head Internet company.” Tiktok seems to be paying the value of the license not just to pay for the business itself, but to build an important infrastructure for the Internet business ecosystem, such as jitter, Kwai Fu, HUAWEI and so on, and actively distribute payment in the past one or two years.

This phenomenon is not isolated. In February, the registered capital of Xinlian payment was changed, and a series of industrial and commercial changes such as shareholders and key personnel occurred. At the shareholder level, Xinlian payment changed its wholly-owned holding from Shandong Expressway Group to 90%, and six new enterprises, including Wanji Technology Co., Ltd. and Jinyi Technology Co., Ltd., were added.

In view of the follow-up development of small and medium-sized payment, Yu Baicheng further added that at present, due to stricter supervision and increased penalties for violations, the living space of some small and medium-sized Payment institutions has been squeezed, and the license value has declined. Therefore, the future of payment business, on the one hand, is to continue to combine with the scene and form synergy with the ecology; on the other hand, it is to expand from payment to segmentation services, such as merchant digital integrated services.

Wang Pengbo suggested that “institutions can expand diversified business on the basis of compliance in the future. From the perspective of industrial chain, we should do more basic business polishing, such as accumulation of offline merchants, and it’s easier to start with SaaS software suppliers in related industries. “.

Beijing Business Daily reporter Yue Pinyu Liu Sihong

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