The online payment market is too large to be ignored. In addition to the four tech giants Alibaba, Tencent, Baidu and JD.com, who are splitting the market, Xiaomi is also getting a slice of the pie by buying a 65% stake in an Inner Mongolia-based third-party payment institution, Ruifutong Corp.
A Xiaomi spokesperson contacted by AllChinaTech on Tuesday refused to comment on the details of the purchase.
According to the State Administration for Industry and Commerce filings of Ruifutong, the transfer of equities was completed in late January. After the transfer, Xiaomi Tech now owns 65% stake in this company, and the parent company’s stake has been reduced from 97% to 32%. Xiaomi’s founder Lei Jun will assume the role of corporate representative and chairman of this company.
Ruifutong Corp. acquired the license issued by China’s central bank to provide payment services in August 2011, and is now the only institution in Inner Mongolia that is authorized to operate in the internet and mobile payment business.
Xiaomi made this move after it failed to acquire a license from the People’s Bank of China for its own payment method. Xiaomi founded its financial arm Xiaomi Zhifu Technology Co., Ltd. in 2013, and made an application to the central bank for a third-party payment business license in 2014. According to an announcement from last April, Xiaomi failed to get the license.
According to Hao Zhujing, an analyst from the Chinese market research agency Analysys International, due to licensing restrictions by the central bank, it will get even harder for many companies to successfully apply for the license. Some companies will acquire authorized third-party payment institutions, which can save on costs required to operate their own payment method, reported the IT channel of Sohu news.
China’s real estate giant Wanda Group also bought a controlling stake in leading third-party payment institution Kuaiqian Payment in late 2014. E-commerce giant JD.com acquired an online payment operation license by acquiring Beijing-based payment institution Chinabank Payments.
According to Analysys International, China’s payment market has grown to RMB 16.36 trillion in 2015, a year-on-year increase of 104.2%. It estimates this market will be boosted to RMB 52.11 trillion in 2018.
(Top photo from by Jakerust at flickr.com)