Since Chinese Central Bank announced details of the third party payment licences, 17 companies have applied for the licenses. (Here is an article about it in Chinese: http://tech.sina.com.cn/i/2010-12-30/02075043339.shtml)
As expected, they included Alibaba’s Alipay, Tencent’s Tenpay and government back China Unionpay. In fact, four of China Unionpay’s subsidiaries are applying for the license. Two of them base in Beijing. One in Shanghai and one in Guangzhou. Shanghai based 99bill is also in the list. So far, the government has not grant them the licences yet. They are still in the process of application.
According to the Chinese article, there are over 130 companies providing third party payment services in China. They have been providing such services for online shops, online game companies and other merchants for quite some time. Their business expanded quickly in the recent years, as online retailers exploded in China. A Beijing based payment solution companies told me their transaction volume increased 5 times from 2007 t0 2008 and another 3 times from 2008 to 2009. Transaction fee is also getting lower and lower. At the moment, Alipay charges about 0.3% for collecting online payment for merchants.
According to market research firm Analysys International, in the third quarter this year, total transaction volume of online payment in China reached RMB 725.5 billion. And it could be over RMB 1 trillion in the fourth quarter.
But there is no specific regulation about payment solution providers until recently. Obviously, the government wants to start regulating them. Will the licencing process force some of the smaller players to merge or close their business ?? It will be interesting to watch.