Shanghai Dazhong Traffic Commerce's payment license revoked early, licensed firms drop to 157

The People's Bank of China (PBOC) recently updated its payment business license information, showing that Shanghai Dazhong Traffic Business Co., Ltd. ("Dazhong Payment") has been added to the list of "cancelled license institutions," with a cancellation date of August 21, 2026.

The prepaid card license, originally valid until December 21, 2026, exited the market four months before its expiration, becoming the sixth payment license cancelled by the PBOC in 2026.

To date, a total of 114 payment licenses have been cancelled nationwide, reducing the number of licensed third-party payment institutions to 157.

Since the PBOC issued the first batch of third-party payment licenses in 2011, a total of 271 licenses have been granted. Over 40% of payment institutions have now exited the market. The ongoing reduction in license numbers is not merely a statistical change but reflects a fundamental shift in the payment industry from rapid expansion to quality improvement.

Prepaid Cards Lead the Exodus

The withdrawal of payment licenses is no longer an isolated phenomenon.

In 2011, the first 27 institutions received licenses, and issuance expanded in subsequent years as the third-party payment sector boomed. At that time, licenses were scarce resources, with the market even seeing high-priced acquisitions of payment licenses.

As the regulatory framework improved and license renewal reviews tightened, license issuance has largely stalled since 2015. The industry entered a long-term phase of capped totals and structural differentiation. Subsequently, a few foreign institutions entered the domestic payment market by acquiring existing licensed entities, such as PayPal (Beibao Payment) and Airwallex.

Among the 114 cancelled licenses, prepaid card issuance and acceptance (currently classified as "Stored Value Account Operations Category II") account for over 70%, making them the primary category of exits.

Dazhong Payment's departure is a representative case. The company received its license in December 2011 with a registered capital of 100 million yuan. Its sole shareholder is Shanghai Dazhong Public Utilities (Group) Co., Ltd. ("Dazhong Public Utilities"), and its license scope was limited to Shanghai. Its "Dazhong e-Tong Card" once covered local consumption scenarios including supermarkets, dining, auto services, and public utility payments. Given its registered capital and shareholder background, the institution was not considered weak among its peers.

It is worth noting that "long-term validity" does not mean "permanent immunity." As of the end of August 2026, 38 institutions have been reissued "long-term valid" payment licenses. Wang Pengbo, Chief Analyst at Botong Consulting, emphasized: "The essence of 'long-term validity' is the regulator's recognition of an institution's current compliance status. Subsequent supervision will fully shift to normalized, dynamic inspections. If an institution has compliance issues, it will face regulatory penalties or even qualification adjustments at any time."

Dual Pressures: Business Model and Regulatory Environment

The accelerated clearing of payment licenses is driven by changes in both business models and the regulatory environment.

The traditional profit model for prepaid card institutions has largely collapsed. With the widespread adoption of mobile payments, QR code payments, digital yuan, and platform-based electronic stored-value coupons have fully penetrated daily consumption, continuously shrinking the use scenarios for multi-purpose prepaid cards. More critically, since January 2019, when customer reserves were placed under full centralized custody, the interest income from idle funds that prepaid card institutions once relied on has disappeared entirely. For small and medium-sized prepaid card institutions with limited business scale and high geographic concentration, revenue continues to narrow while costs rise, making continued licensed operation potentially a "money-losing business."

Regulatory standards have been comprehensively raised, making compliance costs a hard constraint. Since the implementation of the Regulations on the Supervision and Administration of Non-Bank Payment Institutions on May 1, 2024, requirements for anti-money laundering, real-name verification, transaction retention, risk management, and consumer protection have all tightened significantly. On February 1, 2026, the revised Measures for the Classification and Rating Management of Non-Bank Payment Institutions took effect, incorporating seven major modules—corporate governance, business standards, reserve management, user rights protection, system security, anti-money laundering measures, and operational stability—into the rating system. The regulatory logic has shifted from periodic renewal reviews to institutionalized, normalized dynamic governance.

Sharply Rising Compliance Costs

The sharp increase in the cost of non-compliance is equally significant. To date, 34 payment institutions have received regulatory penalties this year, with total fines and confiscations exceeding 305 million yuan—already surpassing the total amount of payment-related fines for the entire year of 2025. Fines in the tens of millions are no longer rare. The highest single penalty this year was set by Shanghai Hanyin Information Technology Co., Ltd., at approximately 74.45 million yuan.

Intensified homogeneous competition and declining channel fees are squeezing the survival space of small and medium-sized institutions from the market side. These institutions lack both the scale effects of leading players and differentiated scenarios and technological capabilities, making it difficult to build moats in mainstream tracks such as acquiring and internet payments. When profit margins are compressed and compliance costs rise rigidly, voluntarily cancelling licenses and cutting losses becomes a rational choice.

As the total number of licenses decreases, market concentration will further increase. The orderly exit of inefficient entities frees up market space that will concentrate toward institutions with stronger compliance capabilities, deeper technological expertise, and more extensive scenario penetration. Leading payment institutions, leveraging their scale, brand, and ecosystem advantages, are expected to consolidate market share further. Specialized institutions in niche segments may build differentiated competitiveness through cross-border payments, industry-specific solutions, and other pathways.

Su Xiaorui, Senior Researcher at Suxi Zhiyan, stated that as the number of payment licenses continues to shrink and "zombie licenses" are cleared out, some payment institutions are choosing to expand outward, increasingly focusing on cross-border business, "which will become a trend in the short to medium term." Meanwhile, the "payment + SaaS" model is reshaping the merchant service ecosystem.

Wang Pengbo noted that the non-bank payment industry is "no longer merely a payment channel but is gradually becoming a foundational transaction infrastructure embedded in the entire business process of enterprises, with its service attributes shifting from tool-based to support-based."

For merchants and consumers, the short-term may bring inconvenience from the exit of some prepaid card institutions. However, in the long run, improved industry standards will benefit fund security and consumer rights protection. The formation of a normalized regulatory exit mechanism also helps reduce the "bad money driving out good" phenomenon, allowing genuinely compliant institutions to enjoy a more stable market environment.