Bilibili joins competition in online payments

Competition in China’s digital payment market is set to intensify as Bilibili, a popular online video-sharing and entertainment platform, has obtained a payment license after acquiring a majority stake in an online payment company. Many internet companies have invested in online payments to cut dependence on third-party payment operators and reduce operating costs. Bilibili acquired a 65.5% stake in Zhejiang Yongyi Payment Co for CNY118 million from the online payment company’s state-owned shareholders. As live-streaming e-commerce has been gaining traction in China since the outbreak of Covid-19, short video platforms have accelerated efforts to acquire online payment licenses and roll out self-owned e-payment services.

In January, ByteDance launched its own third-party payment service for its short video platform Douyin, after it acquired Wuhan Hezhong Yibao Technology Co in 2020. Moreover, Douyin’s rival Kuaishou acquired online payment firm Easylink Payment Co last year. Wang Pengbo, Senior Analyst from market consultancy Botong Analysys, said the primary reason why internet companies obtain payment licenses is to comply with regulatory requirements. “Financial regulators have required companies engaged in financial business to hold related licenses, which will protect sensitive information such as user and business data.”

Wang said obtaining payment licenses will help companies reduce expenditures on commission fees that are given to other online payment providers, explore other financial value-added services, as well as bolster their digital transformation. Wang added that Bilibili’s acquisition will not have a significant impact on the online payment industry in the short term, as it takes time to change users’ payment habits and adapt to new payment functions.

The number of online payment service users in China had reached 872 million by the end of June, accounting for 86.3% of the country’s total internet users, according to a report released by the China Internet Network Information Center (CINIC). In recent years, Chinese tech companies, including Meituan, Pinduoduo, Huawei and Didi Chuxing, have obtained licenses to tap into the payment segment. However, China’s third-party mobile payment sector is dominated by Alipay and WeChat Pay, with the former taking 55.6% of the total market in the second quarter last year, according to market research firm iResearch. Other players include JD Pay and Baidu Wallet, the China Daily reports.