Author: Sleepy.txt
Original title: The Second Half of Payment Globalization: An Endurance Race for the Honest Players
China's payment industry is undergoing an unprecedented reshuffle.
On one hand, small and medium-sized players are leaving the stage in waves. By the end of 2025, the People's Bank of China had revoked 107 payment licenses, reducing the number of licensed institutions to 163, a decrease of over 40% from the industry's peak.
On the other hand, leading players are expanding aggressively at any cost. In 2025, Tencent's Tenpay completed a business registration change, increasing its registered capital from 15.3 billion yuan to 22.3 billion yuan. Shortly after, Douyin Pay and JD.com's Yintong Online followed suit with capital increases ranging from hundreds of millions to billions of yuan.
As profits in the domestic market are squeezed to the limit and regulatory red lines tighten, the only way out is globalization.
The reason giants are不惜重金 (willing to spend heavily) to migrate overseas is that domestic market profits are as thin as a razor blade. Domestic payment fees have long hovered around the survival line of 0.3% to 0.6%, while the average fee for cross-border payments overseas is often as high as 1.5% to 3%. Faced with this temptation of a 3 to 5-fold difference in profit margins, all growth-seeking capital has to turn its attention to the global market.
But capturing this piece of the pie is no easy task. The overseas market is no longer a so-called blue ocean; it is full of stringent regulatory red lines and complex financial struggles. Payment globalization is a costly, protracted war.
Grabbing Licenses, Buying Time
The first step into this blue ocean is to secure an entry ticket.
An overseas payment license is the only ticket to enter the local settlement system. But the cost of this ticket far exceeds imagination. The application fee is just the surface expense; the real bulk is the capital occupation and opportunity cost brought by the lengthy approval period.
Take the US market as an example. The cycle for applying for a Money Transmitter License (MTL) typically takes 12 to 18 months. The application fee itself, often in the high six-figure USD range, is just the tip of the iceberg. The real threshold is the extremely high capital occupation cost. Taking California and New York as examples, the surety bond requirements are as high as $500,000 and $1 million respectively. Application fees for a single state are usually in the thousands of dollars, and annual maintenance fees vary by state, with some reaching tens of thousands of dollars. These costs are enough to cripple most growing companies.
But these costs also transform into a moat for the company. Once they survive the long period of bleeding, they are greeted with huge红利 (dividends) from business explosion.
Airwallex is a very typical example. Over the past decade, Airwallex has accumulated over 80 payment licenses globally. This埋伏 (ambush) laid years in advance, finally paid off in 2025. In 2025, their Annualized Recurring Revenue (ARR) broke through the $1 billion mark. Notably, it took them a full 9 years to earn their first $500 million ARR, but the jump from $500 million to $1 billion only took 1 year.
Lianlian DigiTech is another that relied on hoarding licenses for business explosion. With 66 global licenses in hand, Lianlian's Total Payment Volume (TPV) for global payment business in the first half of 2025 reached 198.5 billion yuan, a surge of 94% year-on-year.
Many capital giants with money but no patience often choose to spend money to buy time.
Payoneer spent nearly $80 million to acquire Yilian Payment, essentially to buy a license. Later, Airwallex's acquisition of Shangwutong, and Sunrate's acquisition of Transfar Payment, followed the same logic: to bypass the lengthy license approval period.
Since the cost of the entry ticket is already so high, can the cost be amortized through subsequent operational economies of scale? Reality is probably far less optimistic than imagined.
Compliance Costs and Talent Scarcity
The compliance system is the foundation supporting global clearing and settlement, and it is also the heaviest hidden cost of payment globalization.
The first compliance hurdle for payment globalization is the Anti-Money Laundering (AML) and Know Your Customer (KYC) systems. Entering a new market requires establishing customer identity verification processes that comply with local regulations.
In the EU, this means complying with the General Data Protection Regulation (GDPR) and the Fifth Anti-Money Laundering Directive (5AMLD); in the US, it requires meeting the requirements of the Bank Secrecy Act (BSA) and the Financial Crimes Enforcement Network (FinCEN).
Building each compliance system requires dedicated legal, risk control, and technical teams, costing millions of dollars. More棘手 (troublesome) is that compliance standards are not static. In 2025, the EU's Digital Operational Resilience Act (DORA) came into effect, requiring all financial institutions to establish stricter cybersecurity and incident reporting mechanisms.
This means payment companies must not only cope with existing rules but also constantly track, interpret, and implement new regulatory requirements. Every regulatory update can trigger a chain reaction of system modifications, process restructuring, and staff training.
This pressure comes not only from overseas but also from domestic regulatory "lookbacks." Since cross-border business involves sensitive capital outflows, domestic regulation on offshore compliance is also rapidly tightening. In 2025, the domestic payment industry received about 75 fines, with cumulative penalties exceeding 200 million yuan. Behind these fines, three types of AML violations were the hardest hit area.
More headache-inducing for companies than this explicit loss is the talent断层 (gap) supporting this system.
China is least short of highly efficient internet talent, but复合型 (versatile) talent in the global financial compliance field is indeed extremely scarce. This scarcity creates a huge gap in the value of compliance talent compared to ordinary positions. In top domestic private enterprises, an annual salary of 1.5 million RMB is merely a starting point. And if we look to Hong Kong or the US, where financial infrastructure is more mature, this number jumps to over 2.5 million HKD or $350,000 USD.
For every additional point of profit an出海 (globalizing) company earns, it must付出 (pay) an additional point of代价 (price) in human leverage. But the problem is, when companies finally pay the toll and get the ticket, is what awaits them really a stable红利期 (dividend period) for harvesting?
Cross-Border Tuition Fees
Multinational expeditions are never been cheap; all跨国野心 (global ambitions) ultimately require paying an extremely expensive买路钱 (toll fee).
Take Paytm, once called the "Indian version of Alipay," as an example. After Ant Group invested approximately 3.36 trillion INR, this company once occupied half of the Indian market. However, a ban by the Reserve Bank of India (RBI) in January 2024, prohibiting it from accepting deposits, conducting credit transactions, and cutting off its payment facilities, directly sent it into the abyss.
The so-called ban ultimately stemmed from India's rejection of Chinese capital. When a national-level financial tool bears a deep Chinese mark, its rise in the Indian主场 (home ground) itself becomes an unforgivable original sin.
By August 2025, when Ant Group completely exited, the loss on its original investment was as high as 1.57 trillion INR (approximately $20 billion), and this also dealt a severe blow to Paytm itself, causing its revenue to plummet by 32.7% year-on-year.
Paytm's defeat reminds us that表面上 (superficially) it's about settling accounts, but actually it's about setting rules. Whoever controls the payment channel holds the lifeline of the business. Currently, "Made in China" is in a "Great Navigation Era," with new energy vehicles and smart home appliances浩浩荡荡 (marching in a mighty torrent)奔向 (heading towards) overseas. This globalization model本质上 (in essence) involves companies venturing into the world alone.
Unlike us, Japanese giants often go abroad with a set of trading company financial systems. Companies like Mitsui and Mitsubishi not only sell cars but also, through internal affiliated finance companies and bank consortiums, control the entire资金全链条 (funding chain) from the factory to the retail end. When Japanese cars are sold in South America or Southeast Asia, these trading companies directly provide inventory financing for local dealers and highly competitive loans for consumers. This means Japanese automakers control every financial checkpoint in the sales network.
In contrast, the globalization of Chinese automakers is more like裸奔 (running naked). Although export volume reached 6.4 million vehicles in 2024, the financial support system is still lacking. Our automakers普遍 (commonly) face problems of expensive financing and difficult repayment overseas. In markets like Russia or Iran, due to the lack of this full-chain financial control力 (capability), the repayment chain becomes instantly fragile once encountering exchange rate fluctuations or settlement sanctions.
Although China's Sinosure insured $17.5 billion in整车 (complete vehicle) exports in 2024, facing the future goal of exporting tens of millions of vehicles annually, minor policy adjustments are clearly insufficient. Big business requires big ledgers. If Chinese automakers don't have truly market-savvy global financial services managing the business accounts backing them up, no matter how big the steps taken, they will feel虚 (unsteady) inside.
Since they have hit a wall in the deep water of globalization rules, can finding a geopolitical避风港 (safe harbor) become an effective bargaining chip for Chinese companies to换取 (exchange for) growth space?
>A Fragmented GlobalizationWhen doing business globally, the real game-changer often lies not in commercial competition, but in those uncontrollable external rules.
What kills a globalizing payment company is often not backward technology, but a political decree from the local regulator. Taking Paytm as an example, against the backdrop of increasingly complex Sino-Indian relations, even with hundreds of millions of users in the Indian market, Paytm was destined to become the most visible target. The scrutiny faced by TikTok in the US follows the same logic. As long as doubts about "data security" exist, the closed loop of its payment business can never be truly completed. This has become a rigid risk in the globalization process that cannot be completely avoided with money.
In this environment, Chinese companies are forced to adopt a "China +1" survival strategy, retaining their core base in China while dispersing key supply chains and clearing paths to regions with lower geopolitical risks.
This explains why the Middle East became a gathering place for capital in 2025. The relatively friendly political atmosphere in the UAE and its e-commerce potential exceeding $50 billion provide a rare buffer period for Chinese payment companies. By 2025, the number of active Chinese enterprise members in Dubai had exceeded 6,190, collectively seeking offshore settlement solutions that can bypass the pressure of the traditional SWIFT system.
However, the threshold for so-called "safe harbors" is also rising day by day. Places like Vietnam, in order to avoid being卷入 (dragged into) tariff troubles, are quickly tightening "origin laundering" policies, strictly investigating companies that just want to change their label for shipment. This shift in wind direction directly forces大批 (large numbers of) payment and logistics companies to重新选址 (relocate), turning their attention to the Indonesian market which offers greater policy flexibility.
According to a McKinsey report in 2025, the global payment landscape is fragmenting. For current payment players, relying solely on a strong product is no longer enough; you also have to learn to dance in shackles, seeking that extremely limited living space in the cracks of international politics, like walking a tightrope.
Epilogue
Payment globalization today has passed the stage of competing for appearances. The real proposition now is no longer studying the interaction logic of the interface, but seeing who has the ability to repair, or even replace, that set of aging global financial plumbing.
In the contest of globalization, the depth of one's pockets is essentially the fault tolerance rate for risk resistance. As those speculators trying to钻空子 (exploit loopholes) and take shortcuts悉数离场 (all leave the stage), the second half of overseas payment has become an endurance race for the "honest players".
In the past, we were accustomed to "fast," accustomed to impacting the old world with model红利 (dividends). But now, we must get used to "slow," get used to laying our own credit assets brick by brick in the financial foundations of foreign lands.
For Chinese payment giants, globalization is no longer a choice, but a向死而生的远征 (expedition towards life through death). There are no shortcuts on the path of globalization. The steadiest path is often the most expensive and time-consuming one. Only when every bit of investment transforms into solid compliance infrastructure can Chinese companies finally stop just setting up stalls selling goods at others' doorsteps, and begin to have the ability to operate their own cash registers.
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