Competition in China's booming mobile payment market is set to intensify, after Didi Chuxing, the country's largest ride-hailing company, acquired a much-coveted license to enter the internet finance sector.
Didi has agreed to acquire third-party payment-services provider 19Pay for 300 million yuan ($45.4 million), according to a filing by Shenzhen-listed GoHigh Data Networks Technology Co, the owner of 19Pay.
The deal will give Didi a license to conduct online-payment business, enabling it to enter an industry dominated by its investors Alibaba Group Holding Ltd and Tencent Holdings Ltd. Didi made the investment through its wholly owned subsidiary Shanghai Shiyuan Technology.
Didi told China Daily that the license will be used to serve its transportation services and improve the user experience.
Currently, the Beijing-based company handles payment transactions for around 20 million ride orders every day, mainly through Tencent's WeChat Pay and Alibaba's Alipay.
Li Chao, a senior analyst at market research company iResearch, said it is a natural move for Didi to enter the internet finance sector, as the company processes a huge amount of data every day.
"Having its own mobile payment tool can boost cash flow, make the best use of its data and help it develop its own ecosystem. Finance, after all, is the foundation of all businesses," Li said.
But according to him, it would be impossible for Didi to totally replace Alipay and WeChat Pay with its own payment tool on its platform, due to the duo's dominance.
The deal came after the People's Bank of China, the nation's central bank, said last year that it would control the number of third-party payment licenses issued, making them highly sought-after. In September, Meituan-Dianping, a major internet player in China, also acquired a third-party payment startup named Qiandaibao.
