Payment Going Global: The Honest Man's Endurance Race

Article | Sleepy.txt

China's payment industry is undergoing an unprecedented major reshuffle.

On one side, small and medium players are quietly exiting in groups. By the end of 2025, the central bank had canceled a total of 107 payment licenses, reducing the remaining licensed institutions to 163, a decrease of over 40% from the industry's peak.

On the other side, the top institutions are aggressively expanding at all costs. In 2025, Tencent's Caifutong completed an industrial change, increasing its registered capital from 15.3 billion RMB to 22.3 billion RMB. Soon after, Douyin Pay and JD's Wangyin Online successively initiated capital increases of hundreds of millions to tens of billions.

With profits in the existing market squeezed to the limit, domestic regulatory red lines tightening, the only way out is to go global.

The reason why the giants are willing to invest heavily in going overseas is that domestic market profits have become razor-thin. The domestic payment fee rate has long hovered between 0.3% and 0.6%, while the average fee rate for overseas cross-border payments is often as high as 1.5% to 3%. Faced with this 3 to 5 times profit gap, all capital seeking growth has to turn its gaze to the global market.

However, capturing this opportunity is no easy task. The overseas market is no longer a so-called blue ocean; it is full of strict regulatory red lines and complex financial struggles. Expanding payments overseas is a costly and enduring war.

Snatch Licenses, Buy Time

The first step to enter this blue ocean is to find a way to obtain an entry ticket.

An overseas payment license is the only ticket to enter the local settlement system. However, the cost of this ticket far exceeds imagination. The application fee is only the tip of the iceberg; the real challenge lies in the prolonged capital occupation and opportunity cost during the extensive review period.

For example, in the U.S. market, the period to apply for a Money Transmitter License (MTL) is usually 12 to 18 months. The application fee, which can reach six figures, is just the visible expense. The real hurdle is the extremely high capital occupation cost. Taking California and New York as examples, the security deposits are as high as $500,000 and $1 million, respectively. The application fees for individual states are usually in the thousands of dollars, and annual maintenance fees vary by state, with some reaching tens of thousands of dollars. This cost is enough to bankrupt most growing companies.

However, these costs will also translate into a moat for the company. Once you endure the long period of financial strain, you will reap the tremendous dividends of business expansion.

The Air Cloud Remittance is a very typical example. Over the past decade, Air Cloud Remittance has accumulated over 80 payment licenses worldwide, setting up this ambush years in advance, which finally paid off in 2025. In 2025, their Annual Recurring Revenue (ARR) surpassed the $1 billion mark in one go. It is worth noting that it took them a full 9 years to earn the first $500 million ARR, but the leap from $500 million to $1 billion only took 1 year.

Another player who leveraged licenses for business takeoff is LinkedDigits. With 66 global licenses in hand, LinkedDigits reached a total payment volume (TPV) of 198.5 billion RMB in the first half of 2025, a staggering 94% year-on-year increase.

Many deep-pocketed but impatient capital giants often choose to spend money to save time.

Payoneer once spent nearly $80 million to acquire EasyLink Payment, essentially to buy a license. Later on, Airwallex acquired SUREPAY, Huiying SUNRATE, and CHINA PAY to avoid the lengthy license approval process, all following the same principle.

Since the cost of entry tickets is already so high, can the subsequent operational scale effect dilute the cost? The reality is probably far less optimistic than imagined.

Compliance Costs and Talent Scarcity

The compliance system is the foundation supporting global settlement and also the heaviest hidden cost of cross-border payments.

The first compliance checkpoint for cross-border payments is the Anti-Money Laundering (AML) and Know Your Customer (KYC) system. Every time a company enters a new market, it must establish customer identity verification processes that comply with local regulations.

In the EU, this means complying with the General Data Protection Regulation (GDPR) and the Fifth Anti-Money Laundering Directive (5AMLD); in the United States, compliance with the Bank Secrecy Act (BSA) and Financial Crimes Enforcement Network (FinCEN) requirements is necessary.

Building each compliance system requires dedicated legal, risk control, and technical teams, with costs reaching millions of dollars. Even more challenging, compliance standards are not set in stone. In 2025, the EU's Digital Operational Resilience Act (DORA) officially took effect, requiring all financial institutions to establish stricter cybersecurity and incident reporting mechanisms.

This means that payment companies not only have to deal with existing rules but also continuously track, interpret, and implement new regulatory requirements. Each regulatory update can trigger a chain reaction of system overhauls, process restructuring, and staff training.

This pressure is not only coming from overseas but also from domestic regulatory lookbacks. Due to the sensitive nature of cross-border transactions, domestic regulators are rapidly tightening the requirements for offshore compliance. In 2025, the domestic payment industry received about 75 fines, with a total fine amount exceeding 200 million yuan. Behind these fines, the three types of AML violations have become a major focus.

More troubling for businesses than this explicit loss is the talent gap that supports this system.

China is not lacking in highly efficient Internet talents, but there is indeed an extreme scarcity of composite talents in the global financial compliance field. This scarcity has created a huge gap in the value of compliance professionals compared to ordinary positions. In top domestic private enterprises, an annual salary of 1.5 million RMB is just a starting point. However, if you look to more developed financial infrastructures like Hong Kong or the United States, this number can skyrocket to over 2.5 million HKD or 350,000 USD.

For every additional unit of profit that outbound companies gain, they must pay an additional unit of cost in terms of manpower leverage. The problem is, when companies have finally paid the toll, obtained the ticket, is what awaits them really a stable period to reap the benefits?

The Tuition of Going Global

Cross-border expeditions have never been cheap; all international ambitions ultimately require a very expensive toll to be paid.

Take, for example, Paytm, once referred to as the "Indian version of Alipay." After receiving an investment of about 3.36 trillion rupees from the Ant Group, this company once dominated the Indian market. However, in January 2024, a ban by the Reserve Bank of India prohibited it from accepting deposits, engaging in credit transactions, and cut off its payment facilities, leading it directly into the abyss.

Ultimately, the so-called ban was actually India's rejection of Chinese capital. When a nationally significant financial tool bears a deep Chinese imprint, its rise in India, its home turf, became an intolerable original sin.

By August 2025, when the Ant Group completely exited, the loss from its initial investment amounted to 1.57 trillion rupees (about 20 billion USD), and Paytm itself suffered a significant blow, with its revenue plummeting by 32.7% year-on-year.

Paytm's retreat serves as a reminder that while it may seem to be settling accounts, it is actually establishing rules. Whoever controls the payment channel holds the key to business. Currently, Chinese manufacturing is in the "Age of Discovery," with new energy vehicles and smart home appliances rushing overseas in full force. This outbound model essentially means companies are venturing into the world alone.

What sets us apart is that Japanese giants often go abroad with a set of trading company financial systems. Companies like Mitsui and Mitsubishi not only sell cars but also, through internal affiliated financial companies and banking consortia, control the entire funding chain from the factory to the retail end. When Japanese cars are sold in South America or Southeast Asia, these trading companies directly provide inventory financing for local dealers and offer consumers highly competitive loans. This means that Japanese automakers control every financial checkpoint in the sales network.

In contrast, the overseas expansion of Chinese auto companies is more like streaking. Despite reaching an export scale of 6.4 million vehicles in 2024, there is still a lack of a robust financial support system. Our auto companies generally face issues of expensive financing and difficult receivables recovery overseas. In markets like Russia or Iran, due to the absence of comprehensive financial control, the receivables chain becomes instantly vulnerable when faced with exchange rate fluctuations or settlement sanctions.

Although Sinosure underwrote $17.5 billion in whole-vehicle exports in 2024, facing a future goal of millions of vehicles exported annually, relying solely on piecemeal policy adjustments is evidently insufficient. Big business needs to be accompanied by a big ledger. If Chinese auto companies do not have a set of financial services behind them that truly understand the market and can manage the global business accounts well, no matter how big a step they take, it will be based on shaky ground.

Since hitting a wall in the deep waters of globalization rules, could finding a geopolitical safe haven become an effective bargaining chip for Chinese companies to secure growth space?

Fragmented Globalization

When doing business overseas, the real winners and losers are often not in commercial competition but in those uncontrollable external rules.

What often kills an overseas payment company is not technological backwardness, but a local regulatory agency's decree. Take Paytm as an example: against the backdrop of increasingly complex China-India relations, even though Paytm has hundreds of millions of users in the Indian market, it is destined to become the most prominent target. The scrutiny faced by TikTok in the United States follows the same logic. As long as there are doubts about "data security," the closed-loop of its payment business can never truly be completed. This has become a rigid risk that cannot be completely avoided with money during the overseas expansion process.

In this environment, Chinese companies are forced to adopt a "China+1" survival strategy, retaining their core base in China while dispersing key supply chains and settlement pathways to regions with lower geopolitical risks.

This explains why the Middle East became a capital hub in 2025. The relatively friendly political atmosphere in the UAE and over $50 billion in e-commerce potential have provided a rare buffer period for Chinese payment companies. By 2025, the active Chinese business members in Dubai have exceeded 6,190, collectively seeking an offshore settlement solution that can bypass the pressures of the traditional SWIFT system.

However, the so-called "safe havens" are also raising their thresholds day by day. Places like Vietnam are rapidly tightening "origin washing" policies to avoid getting caught up in tariff troubles, rigorously inspecting enterprises that only seek to change their appearance for shipping. This shift in direction is directly forcing a large number of payment and logistics companies to relocate and turn their attention to the Indonesian market, which offers more policy leeway.

According to the McKinsey 2025 report, the global payment landscape is falling apart. For today's payment players, relying solely on a good product is no longer enough. You must also learn to dance with shackles, navigate between international politics, and walk a tightrope to find that extremely limited space for survival.

Epilogue

Today, expanding payment services globally has moved beyond a mere show of face. The real challenge now is not to study interface interaction logic but to see who is capable of repairing or even replacing that outdated global financial infrastructure.

In the battle of global expansion, the depth of your pockets is essentially your risk tolerance. As all speculators looking to cut corners and take advantage exit the scene, the second half of international payments has turned into an endurance race for the "honest players."

In the past, we were accustomed to speed, used to leveraging the dividend of established patterns to challenge the old world. But now, we must get used to slowness, accustomed to painstakingly building our credit assets in the financial foundation of a foreign land, brick by brick.

For Chinese payment giants, international expansion is no longer a choice but a life-and-death expedition. There are no shortcuts on the road to global expansion, and the most stable path is often the most expensive and time-consuming. Only when every investment turns into solid compliance infrastructure can Chinese companies finally move beyond setting up stalls in front of others and start managing their own cash register.