Caixin
Dec 20, 2017 08:15 AM
BUSINESS & TECH

Didi Chuxing Picks Up a Payment License

Because of limited supply, some internet giants are looking to buy companies with an existing license to get into the mobile payment business. Above: Didi's headquarters in Beijing. Photo: IC
Because of limited supply, some internet giants are looking to buy companies with an existing license to get into the mobile payment business. Above: Didi's headquarters in Beijing. Photo: IC

Didi Chuxing, China’s largest ride-hailing company, is speeding into the payments business, acquiring a much-coveted license to join the red-hot internet financial-services arena.

Didi has agreed to fully acquire third-party payment-services provider 19Pay for 300 million yuan ($45.4 million), according to a Tuesday statement by Shanghai-listed GoHigh Data Networks Technology Co.

GoHigh Data said its board approved its subsidiary Gaoyang Jiexun Information Technology, which wholly owns 19Pay, to sell the stakes in the payment firm to Didi.

The deal will mean Didi — which won its battle against Uber for dominance in China — will have a license for online-payment business. Didi made the investment through its wholly owned subsidiary Shanghai Shiyuan Technology.

Shanghai Shiyuan has paid a deposit of 90 million yuan for the transaction, according to the statement. The People’s Bank of China (PBOC) has approved the transaction, the company said.

Last year, the PBOC said it would control the number of third-party payment licenses issued, making it increasingly difficult to get a license. Acquiring a company with an existing license has thus become a preferred path for many internet giants to make their foray into the payment business.

In September, Meituan-Dianping, China’s largest group deals site, acquired third-party payment startup Qiandaibao. Some industry insiders said Meituan paid 1.3 billion yuan for it.

By acquiring 19Pay, Didi will be able to develop its own payment service. Didi currently handles payment transactions for some 20 million ride orders every day mainly through WeChat Pay, the mobile-payment tool offered by Tencent Holdings’ popular messaging app WeChat, and Alipay, China’s largest online payment provider affiliated with Alibaba Group.

Founded in 2010, 19Pay obtained an internet-payment business license in 2012. In addition to transacting payments for such things as online shopping or transportation, the company offers mobile phone top-up services through its partnerships with the country’s top three mobile careers – China Mobile, China Unicom and China Telecom. During the first nine months of 2017, 19Pay reported 3.8 million yuan in revenue, with a net loss of 4.8 million yuan. The company has net assets of 73.8 million yuan, according to the statement.

Media reports surfaced as early as March saying that Didi was planning to acquire a payment license holder in efforts to expand into the internet financial sector. Didi denied the reports and said it would focus on the core transportation business. But the company said “mobility covers a rich diversity of payment scenarios. Didi has kept extensive dialogue with partners in this industry.”

Didi has paved the way for its expansion into the online financial sector. Last month, Didi and Ant Financial, the operator of Alipay, became strategic investors in Gaoyang Jiexun. A subsidiary of Didi invested 35 million yuan for a 3.14% stake in the owner of 19Pay.

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