Payment Going Global in Deep Waters: The Long March of Compliance Behind Trillion-Dollar Interest Rate Spreads

Original Author: Sleepy.txt

China's payment industry is undergoing an unprecedented and massive reshuffle.

On one side, small and medium-sized players are exiting the stage in batches, one after another. By the end of 2025, the central bank had cumulatively revoked 107 payment licenses, reducing the number of remaining licensed institutions to 163, a decrease of over 40% from the industry's peak.

On the other side, leading institutions are aggressively expanding their territories regardless of cost. In 2025, Tencent's Tenpay completed a business registration change, with its registered capital skyrocketing from 15.3 billion RMB to 22.3 billion RMB. Following closely, Douyin Pay and JD.com's NetBank Online launched capital increases worth billions or even tens of billions.

When profits in the existing market are compressed to the limit and domestic regulatory red lines are tightening, the only remaining path is: going global.

The reason giants are willing to spend heavily to migrate overseas is that profit margins in the domestic market have become razor-thin. Domestic payment fees have long hovered around the survival line of 0.3% to 0.6%, while the average fee for overseas cross-border payments is often as high as 1.5% to 3%. Faced with this tempting spread of 3 to 5 times, all capital hungry for growth has no choice but to turn its gaze to the global market.

However, taking a bite of this cake is far from easy. The overseas market is no longer a so-called blue ocean; it's filled with stringent regulatory red lines and complex financial power struggles. Payment expansion abroad is a costly, protracted war.

Securing Licenses, Buying Time

The first step into this blue ocean is figuring out how to get a ticket to enter.

An overseas payment license is the only ticket to enter a local settlement system. But the price of this ticket is beyond imagination. The application fee is just the visible expense; the real major costs are the capital tie-up and opportunity costs incurred during the lengthy approval period.

Taking the US market as an example, the cycle for applying for a Money Transmitter License (MTL) typically ranges from 12 to 18 months. The application fee itself, which can be as high as six figures in USD, is just the tip of the iceberg. The real barrier is the extremely high cost of capital tie-up. For instance, in California and New York, the surety bond requirements are as high as $500,000 and $1 million, respectively. The application fee for a single state is usually in the thousands of dollars, and annual maintenance fees vary by state, with some reaching tens of thousands of dollars. These costs are enough to cripple most growing companies.

However, these costs also transform into a moat for the company. Once they survive the long period of bleeding, they are rewarded with huge dividends from business explosion.

Airwallex is a very typical example. Over the past decade, Airwallex has accumulated over 80 payment licenses globally. This early-stage groundwork, laid years in advance, finally paid off in 2025. In 2025, their Annualized Recurring Revenue (ARR) broke through the $1 billion mark. Notably, it took them a full 9 years to earn their first $500 million ARR, but the jump from $500 million to $1 billion took only 1 year.

Lianlian DigiTech is another example of leveraging accumulated licenses for business explosion. With its 66 global licenses, Lianlian's Total Payment Volume (TPV) for its global payment business in the first half of 2025 reached 198.5 billion RMB, a surge of 94% year-on-year.

Many capital giants with money but lacking patience often choose to spend money to buy time.

Payoneer once spent nearly $80 million to acquire Yilian Payment, essentially to buy a license. Later, Airwallex's acquisition of Shangwutong and Sunrate's takeover of Transfar Payment followed the same logic: to bypass the lengthy license approval process.

Given that the price of the entry ticket is already so high, can subsequent operational economies of scale dilute the costs? Reality is likely far less optimistic than imagined.

Compliance Costs and Talent Scarcity

The compliance system is the foundation supporting global clearing and settlement, and it is also the heaviest hidden cost of payment expansion abroad.

The first compliance hurdle for payment expansion is the Anti-Money Laundering (AML) and Know Your Customer (KYC) systems. 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 adhering to the General Data Protection Regulation (GDPR) and the Fifth Anti-Money Laundering Directive (5AMLD). In the US, it requires meeting the requirements of the Bank Secrecy Act (BSA) and the Financial Crimes Enforcement Network (FinCEN).

Building each compliance system requires dedicated legal, risk control, and technical teams, with costs easily reaching millions of dollars. More棘手的是, compliance standards are not static. In 2025, the EU's Digital Operational Resilience Act (DORA) officially came into effect, requiring all financial institutions to establish stricter cybersecurity and incident reporting mechanisms.

This means payment companies must not only cope with existing rules but also continuously track, interpret, and implement new regulatory requirements. Every regulatory update can trigger a chain reaction of system modifications, process restructuring, and personnel training.

This pressure comes not only from overseas but also from domestic regulators' "look-back" reviews. Since cross-border business involves sensitive capital outflows, domestic regulatory requirements for offshore compliance are also tightening rapidly. In 2025, the domestic payment industry received approximately 75 fines, with cumulative penalties exceeding 200 million RMB. Behind these fines, three types of AML violations were the hardest hit.

What gives companies more headaches than these visible losses is the talent gap supporting this system.

China certainly doesn't lack efficient internet talent, but there is indeed an extreme scarcity of composite talent in the global financial compliance field. This scarcity creates a huge gap in compensation between compliance professionals and ordinary positions. In top domestic private enterprises, an annual salary of 1.5 million RMB is merely an entry-level threshold. If we shift our gaze to Hong Kong or the US, where financial infrastructure is more mature, this number jumps to over 2.5 million HKD or $350,000 USD.

For every extra bit of profit an expanding company earns, it must pay an extra price in human leverage. But the question is, when a company finally pays the toll and gets the ticket, is what awaits them truly a stable period of reaping dividends?

The Tuition Fee of Crossing Borders

Multinational expeditions are never cheap. All multinational ambitions ultimately require paying an extremely expensive toll.

Take Paytm, once called the "Indian version of Alipay," as an example. After Ant Group invested approximately 3.36 trillion INR, this company once held half of the Indian market. However, a ban issued by the Reserve Bank of India in January 2024, prohibiting it from accepting deposits, conducting credit transactions, and cutting off its payment facilities, directly plunged it into an abyss.

The so-called ban essentially boils down to India's rejection of Chinese capital. When a national-level financial tool bears a deep Chinese imprint, its rise on the Indian home turf itself becomes an unforgivable original sin.

By August 2025, when Ant Group completely exited, the loss on its original investment amounted to a staggering 1.57 trillion INR (approximately $2 billion). This also dealt a severe blow to Paytm itself, causing its revenue to plummet 32.7% year-on-year.

Paytm's defeat reminds us that on the surface, it's about settling accounts, but in reality, it's about setting rules. Whoever controls the payment channel holds the lifeline of the business. Currently, "Made in China" is in an "Age of Exploration," with new energy vehicles and smart home appliances marching overseas in a grand procession. This mode of expansion is essentially companies venturing into the world alone.

Unlike us, when Japanese giants expand overseas, they often bring a set of trading company financial systems. Companies like Mitsui and Mitsubishi not only sell cars but also, through their internal affiliated finance companies and bank consortia, control the entire capital chain from factories to retail. When Japanese cars are sold in South America or Southeast Asia, these trading companies directly provide inventory financing for local dealers and highly competitive loans for consumers. This means Japanese automakers control every financial checkpoint in the sales network.

In contrast, the overseas expansion of Chinese automakers is more like running naked. Although export volume reached 6.4 million vehicles in 2024, the financial support system is still lacking in many aspects. Our automakers generally face problems of expensive financing and difficult payment collection overseas. In markets like Russia or Iran, due to the lack of such full-chain financial control, once they encounter exchange rate fluctuations or settlement sanctions, the payment collection chain becomes instantly fragile.

Although China Export & Credit Insurance Corporation (Sinosure) insured $17.5 billion worth of vehicle exports in 2024, facing the future goal of exporting tens of millions of vehicles annually, relying solely on minor policy tweaks is clearly insufficient. Big business requires a big ledger. If Chinese automakers don't have a set of truly market-savvy, globally-capable financial services backing them up, no matter how big the strides they take, they will lack confidence.

Since they've hit a wall in the deep waters of globalization rules, can finding a geopolitical safe haven become an effective bargaining chip for Chinese companies to exchange for growth space?

The Fragmentation of Globalization

When doing business overseas, the real deciding factor often lies not in commercial competition but in those uncontrollable external rules.

What kills an overseas payment company is often not technological backwardness but a political decree from the local regulatory authority. Taking Paytm as an example, against the backdrop of increasingly complex China-India relations, even with hundreds of millions of users in the Indian market, Paytm was destined to become the most conspicuous target. The scrutiny TikTok faces in the US follows the same logic. As long as the "data security"质疑 exists, its payment business loop can never be truly completed. This has become a rigid risk in the expansion process that cannot be completely avoided with money.

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 clearing paths to regions with lower geopolitical risks.

This explains why the Middle East became a capital hub in 2025. The UAE's relatively friendly political atmosphere and e-commerce potential exceeding $50 billion provide Chinese payment companies with a rare buffer period. By 2025, the number of active Chinese enterprise members in Dubai had exceeded 6,190, collectively seeking offshore settlement solutions that could bypass the pressure of the traditional SWIFT system.

However, the thresholds for so-called "safe havens" are also rising day by day. In places like Vietnam, to avoid getting entangled in tariff troubles, policies against "origin laundering" are being tightened rapidly, strictly investigating companies that just want to change their label for export. This shift in风向 directly forces a large number of payment and logistics companies to relocate, turning their attention to markets like Indonesia, which offer greater policy flexibility.

According to a McKinsey 2025 report, the global payment landscape is fragmenting. For current payment players, relying solely on a strong product is no longer enough. You must also learn to dance in shackles, navigating the crevices of international politics like walking a tightrope to find that extremely limited生存空间.

Epilogue

Today's payment expansion has moved past the stage of competing for prestige. The real proposition now is no longer studying interface interaction logic, but seeing who has the capability to repair, or even replace, that set of outdated global financial plumbing.

In the contest of going global, the depth of one's pockets is essentially the margin for error against risks. As speculators trying to exploit loopholes and take shortcuts have all left the field, the second half of overseas payments has become an endurance race for the "honest players."

In the past, we were accustomed to "fast," accustomed to using model红利 to冲击 the old world. But now, we must get used to "slow," accustomed to building our own credit assets brick by brick in the financial foundations of foreign lands.

For Chinese payment giants, going global is no longer a choice but an expedition where survival depends on overcoming immense challenges. There are no shortcuts on the path of expansion. The most stable path is often the most expensive and time-consuming one. Only when every bit of investment transforms into solid compliance infrastructure can Chinese companies finally stop just setting up stalls to sell goods at others' doorsteps and begin to have the ability to operate their own cash registers.