(Yicai) Nov. 21 -- Acquiring payment licenses or expanding payment businesses have become two main trends among Chinese internet platforms that are trying to become super apps.

“Payment is a core capability that super apps need to have, as well as a key link in the closed-loop business model,” Xu Li, associate professor at the Antai College of Economics and Management, Shanghai Jiao Tong University, told Yicai.

Scenarios such as e-commerce, livestreaming, content profit-sharing, cross-border business, and digital marketing all involve frequent capital flow and settlement requirements. Relying on third-party payment institutions can limit internet platforms’ operational efficiency and expose them to compliance risks.

After internet platforms obtain their own payment licenses, they can build independent infrastructure systems in areas such as accounts, fund splitting, risk control, and data analysis, thereby laying the foundation for subsequent expansion into financial services, Xu explained.

The implementation of new regulatory policies has made it impossible for internet platforms to rely on third parties for payment data processing in the long term due to commercial and compliance risks, said Wang Pengbo, chief analyst at Botong Consulting. All these factors have transformed the ownership of payment licenses from a bonus to a must-have, he added.

As an underlying infrastructure, payment can directly affect an internet platform’s monetization, risk control, and cross-scenario expansion capabilities, according to Wang.

Below are some examples of internet platforms that acquired licensed payment institutions this year. Online travel services provider Tongcheng Travel bought Xinsheng Payment, lifestyle content platform Xiaohongshu gained control of Oriental Electronic Payment, and life services provider 58.Com purchased a 70 percent stake in Shengya Yunding Payment.

Video streaming platforms Douyin and Kuaishou Technology completed equity acquisitions of licensed payment institutions as early as last year.

In Tongcheng Travel’s case, Xu said that the travel business includes air tickets, hotels, and scenic spots, which require frequent fund splitting, reconciliation, and settlement services. Now, Xinsheng Payment can become a unified settlement node for various businesses under Tongcheng Travel.

This not only improves the overall operational efficiency of Tongcheng Travel but also helps the company provide comprehensive financial solutions to third parties, Xu pointed out.

Meanwhile, large internet platforms have been actively increasing the capital of their affiliated payment institutions this year.

Tencent’s TenPay received regulatory approval in June to raise its registered capital to CNY22.3 billion (USD3.1 billion) from CNY15.3 billion, and JD.Com’s Wangyin Online Beijing Business Service was approved in October to increase its registered capital to CNY1.5 billion (USD210 million) from CNY1 billion.

Editors: Tang Shihua, Futura Costaglione