The Second Half of Global Payments Expansion: A Marathon for the Patient

China’s payments sector is undergoing a dramatic transformation.

Small and mid-sized players are steadily exiting the market. By the end of 2025, the central bank will have canceled 107 payment licenses, reducing the number of licensed institutions to 163—a decline of more than 40% from the industry’s peak.

Meanwhile, top-tier institutions are expanding aggressively, sparing no expense. In 2025, Tenpay, Tencent’s payments subsidiary, increased its registered capital from $2.15 billion to $3.14 billion. Soon after, Douyin Pay and JD.com’s Online Banking launched capital increases in the hundreds of millions to billions of dollars.

As domestic market profits are squeezed to the limit and regulatory red lines tighten, the only remaining option is to expand overseas.

Industry giants are investing heavily in global expansion because domestic profit margins have thinned to the bone. Domestic payment fees have long hovered at a critical 0.3%–0.6% range, while average cross-border payment fees abroad often reach 1.5%–3%. With a 3–5x profit gap, every growth-focused investor is eyeing international markets.

But capturing global opportunities is far from easy—overseas markets are no longer “blue oceans.” They are defined by strict regulatory barriers and complex financial competition. Expanding payment operations internationally is a costly, protracted battle.

License Rush: Buying Time

The first step into the global market is securing an entry permit.

An overseas payment license is the only ticket into local settlement systems—and it comes at a steep price. The application fee is just the beginning; the real cost lies in the lengthy approval process, which ties up capital and opportunity.

Consider the US market: obtaining a Money Transmitter License (MTL) typically takes 12–18 months. The six-figure application fee is just the surface—the real challenge is the high capital requirement. For example, California and New York require bonds of $500,000 and $1 million, respectively. State application fees are usually several thousand dollars, and annual maintenance fees can reach tens of thousands depending on the state. These costs are enough to overwhelm most growth-stage companies.

Yet these expenses can become a company’s moat. Survive the long “bleeding” period, and explosive business growth awaits.

Airwallex is a textbook example. Over the past decade, it accumulated more than 80 payment licenses worldwide, and this forward-planning paid off in 2025. That year, annual recurring revenue (ARR) broke the $1 billion mark. Notably, it took nine years to reach the first $500 million ARR, but only one year to double to $1 billion.

Lianlian Digital also leveraged license accumulation for growth. With 66 global licenses, its total payment volume (TPV) for global transactions reached $27.4 billion in the first half of 2025, a year-on-year surge of 94%.

For well-funded but impatient investors, buying time is often the strategy.

Payoneer spent nearly $80 million acquiring Easypay, essentially to buy a license. Later, Airwallex acquired Swiftnet, and Sunrate bought Transfar Payments—all to sidestep long approval timelines.

Given these high entry costs, can future scale dilute expenses? In reality, that’s far less likely than hoped.

Compliance Costs and Talent Scarcity

Compliance frameworks underpin global clearing and settlement—and represent the largest hidden cost of international payment expansion.

The first compliance hurdle is anti-money laundering (AML) and know-your-customer (KYC). Every new market requires customer identification processes that meet local laws.

In the EU, this means complying with the General Data Protection Regulation (GDPR) and the Fifth Anti-Money Laundering Directive (5AMLD). In the US, it’s the Bank Secrecy Act (BSA) and Financial Crimes Enforcement Network (FinCEN) standards.

Building each compliance system demands specialized legal, risk control, and technical teams—costing millions of dollars. The bigger challenge: compliance standards are always evolving. In 2025, the EU’s Digital Operational Resilience Act (DORA) took effect, mandating stricter cybersecurity and incident reporting for all financial institutions.

Payment companies must not only comply with current rules—they must constantly monitor, interpret, and implement new regulations. Each update can trigger system upgrades, process redesigns, and staff retraining.

This pressure comes from abroad and from domestic “retrospective” supervision. Cross-border transactions involve sensitive outbound funds, so domestic regulators are rapidly tightening offshore compliance. In 2025, China’s payments sector received about 75 fines totaling more than $28 million, with AML violations accounting for the majority.

But even more daunting than these direct costs is the talent gap required to support compliance.

China boasts a vast pool of tech talent, but multidisciplinary professionals in global financial compliance are extremely scarce. This scarcity drives a huge wage gap. At top private firms in China, a $210,000 annual salary is just the starting point. In mature financial hubs like Hong Kong or the US, that figure jumps to $320,000 or more.

Every additional dollar of profit requires greater investment in talent. But after paying the price and securing entry, is a stable period of returns really guaranteed?

The Cost of Crossing Borders

Global expansion is never cheap—every ambition comes with a hefty price tag.

Take Paytm, once called the “Indian Alipay.” After Ant Group invested about $45 billion, Paytm dominated half the Indian market. But in January 2024, a single order from the Reserve Bank of India banned deposits, credit, and payment services, plunging Paytm into crisis.

At its core, the ban reflected India’s rejection of Chinese capital. When a national financial tool bears a Chinese imprint, its rise in India becomes intolerable.

By August 2025, when Ant Group fully exited, its original investment loss reached $21 billion, and Paytm’s revenue plunged 32.7% year-over-year.

Paytm’s defeat shows that the real issue is rule-setting—whoever controls payment channels holds the keys to business. Today, Chinese manufacturing is entering a “great age of exploration,” with new energy vehicles and smart appliances heading overseas. This expansion is essentially companies venturing out alone.

Japanese giants, by contrast, go global with a full trading company financial system. Mitsui and Mitsubishi not only sell cars, but also use internal finance companies and bank consortia to control every funding link from factory to retail. When Japanese cars reach South America or Southeast Asia, these trading companies provide inventory financing to dealers and competitive loans to consumers—controlling every financial checkpoint.

In contrast, Chinese automakers are exposed. Despite exporting 6.4 million vehicles in 2024, the financial support system remains underdeveloped. Overseas, Chinese carmakers face expensive financing and slow payment collection. In markets like Russia or Iran, lacking full-chain financial control, payment flows can collapse instantly under exchange rate swings or settlement sanctions.

While China Export & Credit Insurance Corporation insured $17.5 billion in vehicle exports in 2024, with annual export goals in the tens of millions, incremental policy tweaks are no longer enough. Big business needs robust financial ledgers—without real global financial services behind Chinese automakers, even bold moves are precarious.

When Chinese firms hit a wall in the depths of global rules, can finding a geopolitical “safe harbor” become a viable growth strategy?

Fragmented Globalization

In international business, the decisive factor is often uncontrollable external rules—not market competition.

What kills an overseas payment company is rarely technology, but a single regulatory order. In the context of complex China–India relations, Paytm—with hundreds of millions of users—was destined to be a target. TikTok faces similar scrutiny in the US. As long as “data security” concerns persist, payment businesses can never achieve true closure. This is a hard risk that money cannot eliminate.

As a result, Chinese companies have adopted a “China+1” survival strategy—maintaining core operations in China while diversifying supply chains and settlement routes to regions with lower geopolitical risk.

This explains why the Middle East became a capital magnet in 2025. The UAE’s friendly climate and $50 billion-plus e-commerce potential gave Chinese payment companies rare breathing room. By 2025, more than 6,190 active Chinese corporate members operated in Dubai, seeking offshore settlement solutions that bypass SWIFT system pressures.

But even these “safe harbors” are raising barriers. Countries like Vietnam are tightening “origin laundering” policies to avoid tariff risks, strictly inspecting companies that rebrand for exports. This shift is forcing payment and logistics firms to relocate, turning their focus to Indonesia’s more flexible policies.

According to McKinsey’s 2025 report, the global payments landscape is fragmenting. For today’s payment players, product strength alone isn’t enough. You must learn to “dance in shackles,” finding narrow survival space amid international political tension.

Conclusion

The era of bravado in overseas payments is over. The real challenge is not interface design, but who can repair—or replace—the world’s outdated financial infrastructure.

In global competition, deep pockets mean higher risk tolerance. As shortcut-seekers exit, the second half of overseas payments has become a test of endurance for the “honest players.”

We once prized “speed,” leveraging business model dividends to disrupt the old order. Now, we must embrace “slow”—building credit assets brick by brick on foreign financial foundations.

For China’s payment giants, going global is no longer a choice—it’s a life-or-death expedition. There are no shortcuts; the safest path is the most expensive and time-consuming. Only when every dollar invested builds solid compliance infrastructure will Chinese companies graduate from setting up stalls at others’ doors to running their own cash registers.

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