The second half of payment's overseas expansion: a marathon for the down-to-earth
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The second half of payment's overseas expansion: a marathon for the down-to-earth
There are no shortcuts when going global—the most stable path is often the one that costs the most and takes the longest.
Navigating Web3 tides with focused insightsBy Sleepy
China's payment industry is undergoing an unprecedented reshuffle.
On one side, small and medium-sized players are exiting the market in waves. By the end of 2025, the People's Bank of China had cumulatively revoked 107 payment licenses, reducing the number of licensed institutions to 163—over 40% fewer than at the peak of the industry.
On the other side, leading players are aggressively expanding at all costs. In 2025, Tenpay, Tencent’s payment arm, completed a business registration update, increasing its registered capital from 15.3 billion yuan to 22.3 billion yuan. Shortly after, Douyin Pay and Netbank Online, JD.com’s subsidiary, launched capital increases worth hundreds of millions or even billions of yuan.
As profits in the saturated domestic market shrink to razor-thin margins and regulatory scrutiny tightens, there remains only one path forward: going global.
The reason giants are investing heavily overseas is simple—the domestic market offers vanishingly low profitability. Payment fees in China have long hovered between 0.3% and 0.6%, barely above break-even levels, while average cross-border payment fees abroad range from 1.5% to 3%. Faced with this 3x to 5x margin differential, every growth-hungry capital player must turn its gaze toward global markets.
But capturing this opportunity is far from easy. Overseas markets are no longer blue oceans—they’re battlegrounds defined by strict regulations and complex financial power struggles. Payment globalization is a costly, long-term war.
Securing Licenses Buys Time
The first step into these international waters is obtaining an entry ticket.
Overseas payment licenses are the sole gateway to local settlement systems. But their cost goes far beyond imagination. Application fees are just the visible tip; the real burden lies in capital lock-up and opportunity costs during lengthy approval periods.
Take the U.S. market as an example. Obtaining a Money Transmitter License (MTL) typically takes 12 to 18 months. The six-figure USD application fee is merely the iceberg’s tip—the true barrier is massive capital commitment. In California and New York, for instance, surety bond requirements reach $500,000 and $1 million respectively. Individual state application fees usually run into thousands of dollars, with annual maintenance fees varying widely—some exceeding tens of thousands per year. These expenses alone can bankrupt most growing enterprises.
Yet these high costs also become moats. Once companies survive the prolonged bleeding phase, they unlock explosive returns.
Airwallex is a textbook case. Over the past decade, Airwallex has accumulated more than 80 global payment licenses. This early, long-term investment finally paid off in 2025 when its annual recurring revenue (ARR) surpassed $1 billion. Notably, it took nine years to reach the first $500 million ARR—but only one year to double from $500 million to $1 billion.
Another example is LianLian Digital. With 66 global licenses in hand, LianLian achieved a total payment volume (TPV) of 198.5 billion yuan in the first half of 2025, a year-on-year surge of 94%.
Many well-funded but impatient capital giants choose to buy time outright.
Payoneer spent nearly $80 million acquiring EasyPay, essentially to acquire a license. Later, Airwallex acquired Shopline Payments, and Sunrate absorbed Chuanhua Pay—all following the same logic: bypassing lengthy licensing processes.
Given how expensive entry tickets already are, can subsequent operational scale economies help amortize these costs? Reality may be far less optimistic than imagined.
Compliance Costs and Talent Scarcity
A robust compliance framework underpins global clearing and settlement—and represents the heaviest hidden cost in payment globalization.
The first compliance hurdle in overseas expansion is building anti-money laundering (AML) and Know Your Customer (KYC) systems. Entering each new market requires establishing customer verification processes compliant with local laws.
In the European Union, this means adhering to the General Data Protection Regulation (GDPR) and the Fifth Anti-Money Laundering Directive (5AMLD). In the United States, firms must meet requirements under the Bank Secrecy Act (BSA) and Financial Crimes Enforcement Network (FinCEN).
Setting up each compliance system demands dedicated legal, risk control, and technical teams, costing millions of dollars. Worse, compliance standards aren’t static. In 2025, the EU’s Digital Operational Resilience Act (DORA) came into force, mandating stricter cybersecurity protocols and incident reporting mechanisms for all financial institutions.
This means payment companies must not only comply with current rules but continuously track, interpret, and implement evolving regulations. Each regulatory update could trigger cascading changes—system overhauls, process redesigns, and staff retraining.
This pressure isn't limited to foreign shores—it's amplified by domestic regulators’ “look-back” reviews. Given that cross-border operations involve sensitive outbound capital flows, Chinese authorities are rapidly tightening oversight on offshore compliance. In 2025, China’s payment sector received around 75 penalty notices, totaling over 200 million yuan in fines. Behind these penalties, AML violations emerged as the primary offense category.
Even more troubling than these direct losses is the talent gap sustaining this entire ecosystem.
China has no shortage of efficient internet professionals, but globally experienced, multidisciplinary compliance talent is extremely scarce. This scarcity drives enormous wage disparities. At top private firms in China, an annual salary of 1.5 million RMB is merely an entry-level benchmark. Looking further to Hong Kong or the U.S., where financial infrastructure is more mature, compensation jumps to over 2.5 million HKD or $350,000 USD.
For every additional yuan of profit earned overseas, companies pay a higher price in human capital. But here's the question: once a company pays all dues and secures its ticket, does it truly enter a stable, profitable era?
Tuition for Going Global
There is no cheap way to go global. Every international ambition ultimately demands an exorbitant toll.
Consider Paytm, once dubbed the "Indian version of Alipay." After Ant Group invested approximately 336 billion Indian rupees, Paytm briefly dominated half of India’s digital payments market. However, in January 2024, the Reserve Bank of India issued a ban prohibiting Paytm from accepting deposits, conducting credit transactions, and using its payment infrastructure—effectively crippling the company.
Ultimately, this ban reflected India’s resistance toward Chinese capital. When a national-level financial tool bears a clearly visible Chinese imprint, its rise within India becomes politically intolerable—an inherent liability.
By August 2025, when Ant Group fully withdrew, its initial investment loss reached 157 billion rupees (approximately $2 billion), dealing a severe blow to Paytm itself, which saw revenue plummet 32.7% year-on-year.
Paytm’s downfall reminds us that beneath financial calculations lie deeper rules: whoever controls the payment channel holds the lifeline of commerce. Today, Chinese manufacturing is in its own "Age of Exploration," with electric vehicles and smart appliances flooding overseas markets. Yet this model often leaves companies venturing abroad alone, without systemic support.
In contrast, Japanese conglomerates typically expand overseas backed by integrated trading-financial ecosystems. Companies like Mitsui and Mitsubishi don’t just sell cars—they leverage affiliated financial arms and banking consortia to control the full capital chain from factories to retail. When Japanese autos reach South America or Southeast Asia, these trading houses offer inventory financing to local dealers and competitive consumer loans—giving them control over every financial node in the sales network.
By comparison, Chinese automakers’ overseas push resembles running barefoot. Despite exporting 6.4 million vehicles in 2024, their financial support systems remain underdeveloped. They commonly face high financing costs and delayed receivables. In markets like Russia or Iran, lacking full-chain financial control makes them instantly vulnerable to currency fluctuations or settlement sanctions.
Although Sinosure insured $17.5 billion worth of vehicle exports in 2024, relying solely on incremental policy adjustments won’t suffice for future ambitions targeting tens of millions of units annually. Big business needs big books. Without a financial service backbone that truly understands global markets and manages international accounts effectively, no matter how bold the steps, the foundation remains shaky.
Since crashing into the deep waters of global governance rules, can finding geopolitical safe havens become a viable strategy for Chinese enterprises seeking growth?
Fragmented Globalization
In overseas business, real winners aren’t determined by commercial competition—but by uncontrollable external forces.
What kills a cross-border payment company is rarely outdated technology, but a single regulatory decree. Take Paytm: amid increasingly complex Sino-Indian relations, even with hundreds of millions of users in India, it was destined to become a prime target. TikTok faces similar scrutiny in the U.S.—as long as data security concerns persist, its payment ecosystem can never achieve true closure. This is now an unavoidable, non-monetary risk in overseas expansion.
Under such conditions, Chinese companies are forced to adopt a “China +1” survival strategy—retaining core operations in China while dispersing key supply chains and clearing routes to lower-risk regions.
This explains why the Middle East became a capital magnet in 2025. The UAE’s relatively welcoming political climate and e-commerce potential exceeding $50 billion offer Chinese payment firms a rare breathing room. As of 2025, over 6,190 Chinese enterprises were active in Dubai, collectively pursuing offshore settlement solutions capable of circumventing traditional SWIFT system pressures.
However, so-called "safe harbors" are raising their thresholds daily. Countries like Vietnam, aiming to avoid tariff entanglements, are rapidly tightening "origin laundering" policies, cracking down on firms attempting to simply rebrand for export. This shift has directly forced many payment and logistics providers to relocate, turning their attention to Indonesia—a market offering greater policy flexibility.
According to McKinsey’s 2025 report, the global payment landscape is fragmenting. For today’s players, strong products alone are no longer enough. They must learn to dance in chains—walking a tightrope through the narrow gaps of international politics to seize whatever limited space remains.
Epilogue
Today’s payment globalization has moved beyond superficial competition. The real challenge is no longer about UI/UX design—it’s about who can repair, or even replace, the outdated plumbing of the global financial system.
In this global race, depth of pockets equals margin for error. As speculators chasing loopholes and shortcuts exit the stage, the second half of overseas payments has become a marathon for the disciplined.
We used to value speed, relying on business model advantages to disrupt old systems. Now, we must embrace slowness—patiently laying brick upon brick to build our own credit assets within foreign financial foundations.
For China’s payment giants, going global is no longer optional—it’s a life-or-death expedition. There are no shortcuts on this journey. The safest path is often the most expensive and time-consuming one. Only when every investment translates into solid compliance infrastructure can Chinese enterprises stop being mere street vendors outside others’ doors—and begin operating their own cash registers.
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