The People’s Bank of China (PBOC) has ushered in a new era for China’s non-bank payment sector, announcing the first wave of renewed “long-term” payment business licenses for 13 institutions.

Among the prominent entities to receive these coveted “long-term” permits are Douyin Pay, the payment arm of TikTok’s Chinese parent company ByteDance, and Huawei’s Petal Pay. This renewal ensures their continued operation in China’s highly competitive digital payment market.

However, the new, stricter regulatory environment has also led to significant consolidation. Six companies notably failed to secure renewals, highlighting the intensified scrutiny.

Since the initial issuance of third-party payment licenses in May 2011, and following a halt on new licenses in 2016, the PBOC had granted a total of 271 licenses. Yet, as of June 10, 2025, that number has sharply decreased to 169, representing a substantial 37.6% reduction.

This dramatic decline underscores the ongoing consolidation and tightening regulatory grip on the sector, moving away from previous regular five-year renewals to the new “long-term” system introduced last year.

🔗 Source: Yicai

🧠 Food for thought

1️⃣ China’s payment licensing overhaul reflects regulatory maturation in a massive market

The PBOC’s license renewals represent a significant shift in regulating a market that has experienced explosive growth, with transactions totaling approximately $17 trillion in 2017, more than double the previous year 1.

This regulatory evolution comes after China built the world’s largest mobile payment ecosystem, with approximately 890 million unique mobile payment users and a market dominated by Alipay and WeChat Pay, which together control 93% of the sector 1.

The move from quantity-focused to quality-focused regulation mirrors the market’s evolution from rapid expansion to consolidation, with the PBOC implementing increasingly strict requirements for transaction monitoring and reporting over time 2.

By extending license periods while simultaneously removing non-compliant players, regulators are creating a more stable foundation for a payment ecosystem that processed one-third of all consumer payments in China, with 75% of smartphone users making mobile point-of-sale purchases by 2017 1.

This approach reflects China’s broader strategy of allowing rapid innovation followed by regulatory frameworks that formalize and stabilize markets once they reach maturity.

2️⃣ Payment regulation aligns with China’s global financial infrastructure ambitions

The licensing overhaul coincides with China’s development of alternative international payment infrastructure, most notably the Cross-Border Interbank Payments System (CIPS), which saw transaction values increase by 75% in 2021 3.

While domestic payment networks have matured, China’s international payment infrastructure remains relatively small, with the renminbi accounting for only 2.1% of SWIFT transactions as of April 2022, despite efforts to increase its global adoption 3.

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