Short video and livestreaming platform Kuaishou has acquired online payment firm Easylink Payment Co. Ltd, also known as Payeco, for about RMB 300 million (USD 45.6 million) in cash and an undisclosed amount of Kuaishou stock, media outlet Paypedia reported on Tuesday on its WeChat account.
After the deal, Kuaishou will control more than 50% in the Foshan, Guangdong-based company, which owns a slew of online payment licenses. Kuaishou has applied for payment-related trademarks and is also hiring employees for this business, according to Paypedia. The company has not replied to KrASIA‘s request for comment.
“With a very large base of sticky users, Kuaishou has the foundation to venture into the online payment sector,” Zhang Yu, an analyst with market research firm iResearch, told KrASIA on Wednesday.
The livestreaming platform had more than 302 million daily active users by end of June, according to the company’s IPO prospectus. Kuaishou made RMB 25.3 billion (USD 3.81 billion) in revenue in the first half of this year, up 48% year-on-year. Nearly 70% of it came from the livestreaming business where an average of 64 million users were paying for virtual gifts each month in the first six months of this year. Kuaishou users bought goods worth RMB 109.6 billion (USD 16.56 billion) between January and June while watching short videos or livestreams. Revenue from “other services” increased to RMB 809.6 million from RMB 24.7 million in the first half year of 2019, mainly due to the expansion of the e-commerce business.
“The cost for Kuaishou to push an online payment option within its own business could be very high since the change of a payment option involves extra efforts, such as linking one’s debit or credit cards to the specific payment option,” said Zhang, who believes that will be even harder for the company to gain adoption outside of its ecosystem.
Rush into payments
Zhang predicted that Kuaishou might use discounts for users who choose its payment option instead of WeChat Pay, Huabei Pay, or Alipay, which are currently offered.
Rival ByteDance also gained an online payment license by acquiring a Wuhan-based company in the third quarter, according to Paypedia. Search engine Baidu, the food delivery app Meituan, smartphone vendor Xiaomi, ride-hailing platform Didi, and e-commerce firm JD.com all offer their own payment options to their users. Didi is luring clients away from Alipay and WeChat Pay by offering discounts of up to RMB 5 (USD 0.75) of the taxi fare, KrASIA found.
“An online payment business allows a company to lower payment costs, to explore other finance businesses, such as loans, wealth management, and insurance, while enabling the company to have a closed loop of data by keeping the payment information within its own system,” said Zhang, explaining the rush of China’s internet giants into payment services.