China’s largest online travel agency Trip.com Group Ltd.’s application for the transfer of 100% equity of Shanghai Oriental Huirong Information Technology Service Co., Ltd. was officially approved by the People’s Bank of China (PBOC) on Monday.
This also means that the travel group officially obtained the central bank’s third-party payment license through a wholly-owned acquisition.
Trip.com Group stated that it hopes that this cooperation can further “improve the convenience of payments in the cultural and tourism industry” and “accelerate the recovery of China’s tourism industry” in the context of the global tourism industry being hit hard by the epidemic.
Regarding the conclusion of the transaction, the state-owned Shanghai Oriental Huirong said this cooperation is not only a model for the reform and restructuring of state-owned enterprises, but also an attempt to effectively activate market resources in the tourism sector.
According to a manager of a state-owned banking research center who asked to be anonymous citing its center’s rule, Trip.com’s active acquisition of payment licenses is mainly affected by two factors.
“It is an important part of the travel group’s layout of its own business ecology,” he said.
“Trip.com is a leading group in the travel industry. But this year, due to the dual impact of the epidemic and internet companies such as Meituan and Fliggy, the air travel industry is facing the risk of reshuffling. In order to build the entire ecological business chain from traffic, payment and realize the cash flow, the payment license is a very critical link.”
What’s more, under the influence of strong financial supervision in recent years, the acquisition of payment licenses will achieve business compliance and avoid regulatory risks for Trip.com, he added.
Established in 2011, Shanghai Oriental Huirong is a state-owned enterprise under the Shanghai Municipal Party Committee’s publicity system. In 2012, it obtained a Payment Business License issued by the PBOC.
Payment business in China requires a license issued by the PBOC, and only UnionPay and NetsUnion can do clearing business in the country.
In the past, Trip.com, as a merchant, collected payments through Alipay or WeChat. After charging certain fees, it sent the money to merchants such as airlines, hotels, and travel companies. During the entire transaction process, it was actually doing the business of clearing and settlement, which was not allowed by the Chinese regulation system.
After holding a payment license, Trip.com, as a payment institution, can clear through UnionPay and NetsUnion after receiving payments, and then give the money to other merchants.