Original After two and a half years, Douyin’s 750 million acquisition was gone

I never expected that Tik Tok, which is at its peak, would also have things that are difficult to accomplish even with money.

On September 30, listed company Hailian Jinhui announced that the acquisition transaction of 100% equity of its subsidiary UMC Payment Co., Ltd. was officially terminated. The buyer, Tianjin Tongrong E-Commerce Co., Ltd., is the payment operator within the Douyin system.

This acquisition, which started in the spring of 2024 and was priced at a benchmark consideration of 750 million yuan, had high hopes. The market generally believes that this is a key step for Douyin to complete its offline bank card acquiring qualifications and open up the closed loop of local life transactions.

However, after two and a half years, the agreement was terminated without waiting for regulatory approval. The expansion of Douyin’s payment territory has encountered substantial Waterloo for the first time.

1. 支付棋局

Doesn’t Douyin already have Douyin Pay? Why do you still need to spend 750 million to buy another one to pay for photos?

As early as August 2020, ByteDance obtained its first payment license through the acquisition of Wuhan Hezhong Yibao. Douyin Payment was officially launched the following year.

But the core qualification of this license is Internet payment, focusing on online scenarios. For offline merchants to collect payments in stores and POS, they also need special bank card acquiring qualifications.

What UMC has in its hands is exactly this ticket. This is almost a necessity for Douyin’s local life strategy.

In April 2024, Tianjin Tongrong within the Douyin system signed a contract with Hailian Jinhui to acquire 100% of the equity of the latter’s Umnipay at a base price of 750 million yuan, plus net assets on the delivery date. This means that Douyin is finally going to make up for a key shortcoming in its payment business.

Today’s Douyin is no longer a content platform. It makes hundreds of billions of GMV a year, invests heavily in local group buying, promotes food delivery, and develops hourly supermarket delivery. All stories will eventually come down to transactions. If users buy coupons and order meals online, and then have to jump to WeChat or Alipay to pay in store, the transaction data will not be accumulated, the user portrait will not be complete, and subsequent financial value-added services will be impossible to talk about.

Payment is the throat of the business ecosystem. Whoever controls payment will control the entire transaction chain.

This is not the obsession of the Douyin family. In the past two years, Xiaohongshu acquired Oriental Payment, Tongcheng acquired Xinsheng Payment, 58.com acquired Shengya Yunding Payment, and Internet companies lined up to acquire payment licenses, which has almost become an industry consensus.

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In the era of peak traffic, everyone wants to hold payment in their own hands, not only to reduce costs and increase efficiency, but also to close the ecological loop.

2. 收購黃了

This time, the direct reason for the collapse of the transaction is very clear – the acquisition target was investigated for suspected violations of laws and regulations, and the case has not yet been concluded.

On August 28 this year, the central bank announced the results of a new round of payment license renewal. UMF’s renewal was suspended due to “the existence of the circumstances specified in Article 24 of the “Administrative Licensing Implementation Measures of the People’s Bank of China”.

Suspending the renewal is not a revocation, but it means that it is unknown whether and when the license can be renewed. The essence of buying a license is to buy qualifications. If the qualifications are pending, the transaction will naturally lose its foundation.

But looking back, this thunder has been buried a long time ago.

In September 2024, UMF was fined 84.7 million yuan by the Foreign Exchange Bureau due to violations of cross-border merchant business between 2020 and 2023. This fine occurred after the acquisition agreement was signed, which is equivalent to the addition of major compliance flaws in the target assets after due diligence was completed.

From the announcement of the transaction in April 2024 to its termination in September 2026, in two and a half years, this equity transaction has never received regulatory approval.

In the past, the industry still had room for “acquisition first, then rectification, and finally development”. But today’s regulatory environment is no longer what it was back then, and the regulatory logic of the entire payment industry has undergone a fundamental shift.

Just in February this year, the central bank’s revised “Measures for the Management of Classified Ratings of Non-Bank Payment Institutions” was officially implemented. There are 7 major assessment modules, 5 categories and 11-level ratings, which are reviewed once a year. The rating results directly correspond to the intensity of supervision. If the rating is poor, business will be restricted, new additions will be suspended, or the license will even be cancelled.

This marks the payment industry’s complete farewell to the era of “one card lasts forever”.

In the past reckless period, payment licenses were scarce resources, and you could earn them if you got them. No matter how bad the business was, as long as you didn’t make huge mistakes, you could always pass the renewal. Therefore, license trading is popular, and it is common for a license to be sold for more than one billion. Many companies buy licenses not to do business at all, but to hoard them and wait for the value to increase.

But now the rules of the game have changed, licenses have changed from fixed assets to dynamic licenses, and supervision no longer only covers access, but the entire life cycle. Whether compliance is good, risk control is not in place, and whether users’ rights are infringed will be graded every year. If they fail to pass the standards, they will make rectifications. If they fail to make rectifications, they will be delisted.

Since the beginning of this year, many payment institutions have failed at the renewal stage. Today, when compliance is paramount, no giant is willing to take this risk.

3. 一照難求

Douyin has a good hand in payment, with a traffic pool of over 1 billion monthly active users, a trillion-level transaction scale of live broadcast e-commerce, and the rapid growth of local life.

It stands to reason that with such a large transaction volume, it is logical to incubate a self-owned payment tool. But the reality is that Douyin Payment is going through bumps every step of the way.

Online, it relied on subsidies and scenario binding to quickly grow in volume, but it has never been able to break out of the Douyin ecosystem itself; offline, it relied on local promotion to conquer cities and territories, but the underlying acquiring link was always in the hands of others.

It looks like there are Douyin payment logos everywhere, but in fact it’s just superficial beauty, but the core is restricted. The failure of this acquisition is equivalent to blocking most of Douyin’s offline payment methods.

Some people would say that without an acquiring license, the worst thing to do is to cooperate with a licensed institution, and wouldn’t it be good to operate light assets?

That’s true, but for a platform of Douyin’s magnitude, payment is not just a business of earning fees, but the infrastructure of the business ecosystem.

You see, the reason why WeChat Pay can penetrate into every street store is that its own acquiring system supports the entire social commerce closed loop; Alipay’s move from Taobao to offline relies on a complete payment license matrix.

Not having your own acquiring license is equivalent to building a house on someone else’s foundation. No matter how high you build it, it will collapse if the foundation is removed.

What’s even more embarrassing is that the acquisition window for existing payment licenses is closing quickly.

The central bank has already suspended the approval of new licenses, and the number of existing licenses on the market is being cancelled. The remaining targets for sale are either zombie license plates with shrinking business or defective license plates with various historical problems. There are only a handful of truly clean and compliant full license plates, and prices have already risen.

Douyin has stepped on the pitfalls of Lianlian Advantage this time. It will only be more difficult and expensive to find a suitable target next time.

4. 風向變了

Douyin’s decision to hit the brakes this time is meaningful when viewed in the context of the platform economy.

Once upon a time, the standard for Internet giants was a full financial license. Alibaba has Ant, Tencent has Tenpay, JD.com has JD Technology, and Meituan has Meituan Finance. Anyone who doesn’t have a few financial licenses would be embarrassed to say that they are in the ecosystem.

Payment is the entrance, credit is profit, financial management is precipitation, and insurance is supplement. With a set of combinations, traffic can be turned into financial profits.

But in the past few years, the trend has completely changed.

Ant Group was restructured into a financial holding company and returned to licensed operations; Tencent Pay repeatedly emphasized the “tool attribute” and no longer mentioned the financial ecosystem; JD Finance was separated and independent, shrinking its business boundaries; Meituan also quietly removed a number of financial products.

The red lines for supervision are becoming clearer and clearer: technology belongs to technology, and finance belongs to finance. You can use payment to improve ecological efficiency, but you cannot do bank business under the guise of payment.

Douyin is a latecomer and has been more cautious.

From the first day it was launched, Douyin Pay has not told many financial stories. It has been a payment tool that serves e-commerce and local life. This acquisition of UMC is not essentially a financial expansion, but is just to supplement the payment capabilities in offline scenarios and make the business closed loop smoother.

Even so, in the face of the hard threshold of compliance, it is necessary to stop.

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