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Last year, the payment industry in China experienced significant shifts following the implementation of new regulations aimed at strengthening oversight of non-banking payment institutions. Over 20 of these firms boosted their capital reserves, according to data from the People’s Bank of China. For instance, one of the leading payment platforms under WeChat received approval to increase its capital by 7 billion yuan (approximately $1 billion), reaching a total of 22.3 billion yuan (about $3.2 billion).
The new rules governing the supervision and administration of non-banking payment institutions officially took effect on April 30, 2025, following a one-year transitional period. These regulations mandate that such institutions maintain a minimum paid-in capital of 100 million yuan (around $14.3 million) and impose stricter standards for risk management and capital adequacy ratios.
Experts note that a stronger capital base enhances an institution’s ability to allocate funds, manage risks, and develop their systems. As compliance costs for anti-fraud and anti-money laundering measures increase, increasing capital not only ensures regulatory compliance but also supports business growth.
Currently, China has 164 licensed payment institutions, following the revocation of 107 licenses last year—most of which, roughly 80 percent, were prepaid card licenses, according to the same data.
Amid intense domestic competition, many Chinese non-banking payment firms are exploring opportunities in the cross-border payment sector. In the first three quarters of last year, the cross-border transaction volumes for companies like Lakala Payment grew nearly 78 percent compared to the previous year. Similarly, LianLian DigiTech and CoGoLinks experienced increases of 94 percent and 170 percent, respectively.
This trend is largely driven by the rapid growth of cross-border e-commerce and higher profit margins. While domestic payment fees have remained stable at around 0.6 percent for a long time, cross-border transaction fees typically range from 2 to 3 percent, according to industry insiders.
Furthermore, cross-border payment providers often offer value-added services such as multi-currency settlements, exchange rate risk management, and supply chain financing, which contribute to higher profit margins.
However, despite these opportunities, cross-border payments also bring challenges, including information asymmetry and risks associated with operating across multiple markets. Industry insiders emphasize the importance of thoroughly understanding the security and compliance risks tied to each region and developing robust risk management and anti-money laundering capabilities.
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