News from Mobile Payment Network: China’s payment industry is accelerating its overseas expansion.
Recently, New Guodu announced that its wholly-owned subsidiary New Guodu Europe Co., Ltd. (hereinafter referred to as "New Guodu Europe") received a notice from the Luxembourg Financial Supervisory Commission and was approved to grant a payment institution operating license and After completing the registration process, you will be allowed to carry out merchant acquiring service business in the EU.
Xinguodu obtained the Luxembourg PI (Payment Institution) license, which is a relatively scarce license type. According to public statistics, the previous two European payment licenses granted to Chinese-funded institutions were issued in 2017 and 2018 respectively. In the past three years, the only European payment license issued globally in the past three years was approved by New Zealand.
As a representative of China’s payment industry, Xinguodu’s obtaining the PI license is an important step in its globalization. At the same time, as a provider of global payment terminals, Xinguodu's "payment terminal" approach is not only applicable domestically, but also applies to the merger and expansion of the global payment industry.
What can a PI license do and how difficult is it to apply for?
Luxembourg is located in the heart of Europe, and its per capita GPD ranks first in the world. As one of the founding members of the European Union, it is not only an important financial hub, but also the "gatekeeper" for companies entering the EU. Luxembourg's financial qualifications Can be recognized in the European Union.
So to put it more generally, Xinguodu not only obtained the Luxembourg PI license, but also obtained the EU payment license.
Enterprises that obtain a PI license can carry out services such as merchant acquisition (credit card, debit card), personal transfer, etc., and can also provide services such as currency exchange, electronic tokens, and prepaid card recharge. Analogous to the domestic payment license system, the PI license is an integration of prepaid cards, Internet payment, and bank card acquiring, and is a full payment license.
When applying for a PI license, it is required that the headquarters or central management organization of the applicant organization must be established in Luxembourg, and important departments must not be outsourced. This is a rigid requirement. By analogy, some financial licenses in other regions around the world can be applied for by agencies, and there is no need to set up a local office or any direct employees. This is why the PI license is more valuable.
In addition, when applying for a PI license, the Luxembourg regulatory authorities need to conduct an "interview" with the organization and formally introduce the project and the person in charge. After that, detailed application materials need to be submitted, including many core contents such as business plan and operating model, risk management framework, anti-money laundering policy and IT infrastructure. Subsequent local regulatory authorities will further request additional information based on the completeness of the materials.
The entire application process takes between 4 and 12 months, depending on the complexity of the business and the completeness of the application materials. In addition, with the implementation of the second edition of the EU Payment Services Amendment Act (PSD2) and the introduction of multiple new anti-money laundering regulations, the review of PI licenses has become more complicated and the application time may be longer.
The application threshold for a PI license is high, so only large international companies will apply. Known companies include Alipay, Amazon, Rakuten and other well-known companies in Japan. From this perspective, this is also a direct proof of the strength of Xinguodu Enterprises. In addition, Xinguodu also stated that it has "established an anti-money laundering and anti-terrorist financing compliance system in accordance with the highest standards of the international payment industry" and its compliance capabilities and technical strength cannot be underestimated.
Through Xinguodu’s international actions, we can actually see the development trends of international and domestic payments.
The international payment development trend of "payment terminals"
According to Xin Guodu, its international strategy is to go hardware first and follow up with the platform, that is, first the mobile payment hardware goes overseas, and then mobile The payment platform goes overseas, "allowing China's advanced acquiring model to go global."
In the expansion and merger of international payment companies, a comprehensive approach similar to the integration of upstream and downstream "payment terminals" is very suitable.
In January 2019, Fiserv, an American financial technology service company, spent US$22 billion to acquire First Data, an American payment service provider. It is a combination of "financial information system and payment services".
In August 2019, the American financial technology group Fidelity National Information Services (FIS) spent approximately US$35 billion to acquire Worldpay, the world's leading independent payment business operator, which is a combination of "financial software and payment services".
In November 2020, the French payment service provider Worldline announced the completion of the acquisition of the payment terminal provider Ingenico, which is a more typical combination of "payment service terminal". This is similar to Xinguodu’s domestic business matrix. In the future, Worldline will also be Xinguodu’s biggest competitor in developing international business.
From the relatively typical payment acquisition cases in the world in recent years, it can be seen that opening up the payment link and forming upstream and downstream industry linkage is a major development trend.
Now that the PI license has been obtained, how much room for imagination does Xinguodu have in the international payment market?
According to Xinguodu, Xinguodu Europe is currently stepping up system testing of products and services exported overseas, and plans to officially launch an aggregate payment business in the fourth quarter of this year to prepare for the next phase of VISA/MasterCard card development. Laying a solid foundation for acquiring and paying.
Prior to this, Xinguodu’s payment terminals had gained rapid recognition in Europe.
The Nielsen report shows that in 2020, Xinguodu Payment Terminal ranked 11th in Europe, while this ranking was only 30th in 2018, showing rapid growth. In addition, Xinguodu's 2021 financial report shows that Xinguodu's overseas revenue from its electronic payment equipment business increased by 88.30% year-on-year, and shipments increased by 96.82% year-on-year.
The 2021 New Guodu Financial Report also highlights that New Guodu Payment has laid out and accumulated experience in key countries and regions in the international market, and has formed strategic cooperative relationships with customers in Africa, Europe and South America. At the same time, its products The R&D team combines overseas localization needs to develop specialized products that fit local usage scenarios and gain recognition from overseas customers. The company's products and brand image have good communication and visibility overseas.
Hardware goes first, platform follows. With the acquisition of the PI license, Xinguodu Overseas Payment has taken the first step. With the international recognition of payment terminals already high, its international payment business is worth looking forward to.
Xinguodu’s overseas actions have also aroused the domestic payment industry’s longing for the international market.
Going overseas may become the second growth curve of payment
The domestic payment market has gradually entered a stable period, showing a trend of steady growth.
Payment data from the People's Bank of China shows that between 2017 and 2021, the growth rate of online payment amounts of non-bank payment institutions has stabilized, from a growth rate of over 40% in 2017 and 2018 to a rate of over 40% in the past three years. A growth rate of around 20.
In addition, after years of development, domestic mobile payment has become popular, and payment services have also transformed from high-speed development to high-quality development. While the growth rate has slowed down, providing merchants with SaaS, marketing and other comprehensive payment services has become The current main transformation direction of acquirers.
As early as 2017, Fan Yifei, deputy governor of the People's Bank of China, proposed to encourage more and more domestic payment industries, especially non-bank payment institutions, to go global and participate in international competition to gain momentum for sustainable development.
During this year’s Two Sessions, Jin Penghui, a member of the National Committee of the Chinese People’s Political Consultative Conference, deputy director of the Shanghai Headquarters of the People’s Bank of China and president of the Shanghai Branch, proposed that qualified and capable payment institutions should be encouraged to “go global.”
Jin Penghui suggested strengthening the policy guidance for payment institutions to "go global", assisting payment institutions to fully understand the regulations on market access and business development in the country of investment, urging payment institutions to comply with local regulatory requirements, proactively apply for local payment licenses, or Carry out business cooperation with local financial institutions to jointly promote the development of inclusive finance.
In addition, there are clear provisions to support payment companies in “going global”.
In July 2021, the General Office of the State Council issued the "Opinions on Accelerating the Development of New Business Forms and Models of Foreign Trade", which stated that it supports non-bank payment institutions to "go global."
Prior to this, payment giants such as WeChat and Alipay gradually opened up overseas markets by applying for local payment licenses, serving Chinese tourists, and developing local payment services. However, my country's acquiring industry has not kept up with the pace, making payment overseas becoming a giant's overseas development, rather than the development of the entire payment industry ecosystem.
Xinguodu’s application for a PI license is the first step into the European payment market. Its exploration path is worth looking forward to, providing certain implementation experience for the domestic payment industry to go overseas.